McIlwain, C. v. Saber Healthcare Group, LLC , 208 A.3d 478 ( 2019 )

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2019 PA Super 122CHALENA MCILWAIN, AS : IN THE SUPERIOR COURT OF
ADMINISTRATRIX OF THE ESTATE OF : PENNSYLVANIA
NORMAN JAMES FRANKS :
:
Appellant :
:
:
v. :
: No. 2060 EDA 2018
:
SABER HEALTHCARE GROUP, INC., :
LLC; SABER MANAGEMENT INC.; :
HEALTHCARE HOLDINGS, LLC; :
AMBLER HEALTHCARE GROUP, LLC; :
KAREN PULINI (AS TO AMBLER :
EXTENDED CARE CENTER) :
Appeal from the Order Entered March 6, 2018
In the Court of Common Pleas of Montgomery County Civil Division at
No(s): 2017-19910
BEFORE: LAZARUS, J., KUNSELMAN, J., and COLINS*, J.
OPINION BY COLINS, J.: FILED APRIL 22, 2019
Appellant, Chalena McIlwain (McIlwain), as Administratrix of the estate
of Norman James Franks (Franks), appeals from the order entered on March
6, 2018, sustaining the preliminary objections of Appellees, Saber Healthcare
Group, Inc., LLC, Saber Management Inc., Healthcare Holdings, LLC, Ambler
Healthcare Group, LLC, and Karen Pulini (collectively, Saber) as to survival
claims brought by McIlwain concerning the death of Franks, her father. We
reverse the trial court’s sustaining of Saber’s preliminary objections and
remand for further proceedings in the trial court.
Franks suffered from a diagnosis of schizophrenia and dementia. The
Superior Court of California granted McIlwain letters of temporary
* Retired Senior Judge assigned to the Superior Court.
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conservatorship of Franks’ person and estate on May 9, 2013. The temporary
conservatorship was set to expire on July 31, 2013. On May 13, 2013, Franks
entered Saber nursing home in Pennsylvania. McIlwain signed Franks’
admission papers in the space designated “Authorized Representative,” and
the box next to “Conservator” was checked. See Saber Sur-Sur Reply, Ex. E.
There is an asterisk next to “Conservator,” leading to a statement “copy of
legal documents must be provided to Facility.” Id. The document was also
signed by a “Facility Representative.” Id. Additionally, McIlwain signed a
“Resident and Facility Arbitration Agreement,” which provided, in part, that
the parties to the agreement would submit to arbitration if there was a
dispute. Prelim. Objs. Ex. B. McIlwain signed the arbitration agreement in
the same way she signed the admission paperwork. Id. The arbitration
agreement stated, in capital letters and bold typeface “Not a Condition Of
Admission” at the top of the document. Id. Due to Franks’ severe cognitive
defects, he was incapable of making decisions on his own. See Saber Sur-
Sur-Reply Brief and Answer at 3; see also Saber Sur-Sur-Reply, Ex. G (noting
Franks’ admission diagnosis of paranoid schizophrenia and advanced vascular
dementia).
On July 30, 2013, the Court of Common Pleas of Montgomery County,
Orphans’ Court Division, appointed McIlwain as permanent guardian for
Franks. On July 31, 2013, the letters of temporary conservatorship from the
Superior Court of California expired. Franks was a resident at Saber from May
13, 2013 until September 18, 2016. During his stay at Saber, Franks suffered
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multiple falls and urinary tract infections. Franks died on October 24, 2016
after falling and hitting his head while living at Saber.
On August 7, 2017, McIlwain filed a complaint against Saber alleging
negligence, wrongful death and survival claims. Saber filed preliminary
objections arguing that the dispute was subject to binding arbitration and
attached the arbitration agreement McIlwain signed on behalf of Franks.
McIlwain filed a response alleging that Saber did not produce any evidence
that McIlwain had the authority to sign that agreement. Saber filed a sur-
reply attaching a copy of the letters of temporary conservatorship from the
Superior Court of California. McIlwain filed a sur-reply arguing that there is
no evidence the conservatorship was transferred to Pennsylvania pursuant to
the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act
(UAGPPJA)1 and therefore, the conservatorship was not valid in Pennsylvania.
Saber filed a sur-sur-reply alleging that the conservatorship was valid, in part
because of the Full Faith and Credit clause of the United States Constitution.2
On March 6, 2018, the trial court filed the order in question, sustaining
Saber’s preliminary objections as to the survival claims. The trial court found
that McIlwain had the authority to bind Franks to the arbitration agreement,
and, therefore, bifurcated the survival claims and sent them to arbitration.
The trial court overruled Saber’s remaining preliminary objections pertaining
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1 20 Pa.C.S. §§ 5901-5992.
2 U.S. Const. Art. IV, § 1.
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to the wrongful death and negligence claims. As to the wrongful death claims,
the trial court determined that McIlwain did not agree to arbitrate her own
claims against Saber. See TCO at 9-10. The arbitration agreement covered
claims “between the parties” and McIlwain was not a party to the agreement.
Id.
McIlwain filed a motion with the trial court to amend the March 6, 2018
interlocutory order to include the language set forth in 42 Pa.C.S. § 702(b) to
allow for an immediate appeal. The trial court did not enter a ruling on the
motion, and the motion was deemed denied on May 5, 2018. See Pa.R.A.P.
1311(b). In response, McIlwain filed a petition for review with this Court on
June 1, 2018.3 On July 23, 2018, this Court granted the petition for review.
The Order directed that the matter should proceed before the Superior Court
as an appeal, at 2060 EDA 2018, from the trial court’s order dated March 6,
2018.4
On appeal, McIlwain raises the following question for review:
1. Did the trial court err in finding that Chalena McIlwain had
sufficient legal authority in Pennsylvania to enter into an
arbitration agreement on behalf of her father, Norman James
Franks?
Appellant’s Brief at 3-4.
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3McIlwain filed another petition for review on June 6, 2018, given the docket
number 75 EDM 2018. This petition appears to be duplicative of McIlwain’s
earlier petition and it was, therefore, denied on July 19, 2018.
4We note that our Order states “March 8, 2018” but that is a typographical
error.
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Our review of a challenge to a trial court’s decision to grant preliminary
objections is guided by the following standard: “[w]e will reverse a trial
court’s decision to sustain preliminary objections only if the trial court has
committed an error of law or an abuse of discretion.” American Express
Bank, FSB v. Martin, 200 A.3d 87, 93 (Pa. Super. 2018). “When considering
preliminary objections, all material facts set forth in the challenged pleadings
are admitted as true, as well as all inferences reasonably deducible
therefrom.” Feingold v. Hendrzak, 15 A.3d 937, 941 (Pa. Super. 2011)
(citation omitted).
At the outset, Saber contends that because McIlwain was appointed
temporary conservator of Franks’ person and estate in California a few days
before signing the arbitration agreement, she had the authority to sign this
agreement in Pennsylvania on behalf of Franks. The California letters of
temporary conservatorship provided the following:
The Temporary Conservator has been granted the following
powers under Probate Code Sections 2590, which powers are
necessary for the protection of the Conservatee and his estate:
The power to contract for the guardianship or conservatorship and
to perform outstanding contracts and thereby bind the estate…the
power to…arbitrate, or otherwise adjust claims, debts, or demands
upon the guardianship or conservatorship.
See Saber Sur-Reply, Ex. E. We look to the statutes governing guardianships
and conservatorships to determine if the California temporary conservatorship
gave McIlwain the authority to sign the arbitration agreement in Pennsylvania.
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In 2007, the National Conference of Commissioners on Uniform State
Laws drafted the Uniform Adult Guardianship and Protective Proceedings
Jurisdiction Act (Uniform Act) to specifically address jurisdiction and related
issues in adult guardianship and protective proceedings, including problems
relating to transferring a guardianship from one state to another and
recognition of an out-of-state guardianship/conservatorship order. See
Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (2007)
at 1-2.5 In the prefatory note, the Uniform Act states,
[b]ecause the United States has 50 plus guardianship systems,
problems of determining jurisdiction are frequent. . . . There is a
need for an effective mechanism for resolving multi-jurisdictional
disputes. Article 2 of the [Uniform Act] is intended to provide such
a mechanism. . . . [F]ew states have streamlined procedures for
transferring a proceeding to another state or for accepting such a
transfer. . . . Article 3 of the [Uniform Act] is designed to provide
an expedited process for making such transfers, thereby avoiding
the need to relitigate incapacity and whether the guardian or
conservator appointed in the first state was an appropriate
selection. . . . Sometimes, guardianship or protective proceedings
must be initiated in a second state because of the refusal of
financial institutions, care facilities, and courts to recognize a
guardianship or protective order issued in another state. Article
4 of the [Uniform Act] creates a registration procedure. Following
registration of the guardianship or protective order in the second
state, the guardian may exercise in the second state all powers
authorized in the original state’s order of appointment . . . .
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5https://www.uniformlaws.org/HigherLogic/System/DownloadDocumentFile.
ashx?DocumentFileKey=dc4d38fd-7d13-4d14-053c-
7160a2c1a9c3&forceDialog=0 (last visited March 29, 2019).
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Id. As of March 2019, 49 of the US states and territories have enacted a
version of the Uniform Act, including both Pennsylvania and California.6
Pennsylvania enacted its version in 2012 known as the UAGPPJA. 20
Pa.C.S. § 5901. “The Act applies only to court jurisdiction and related topics
for adults for whom the appointment of a guardian or conservator or other
protective order is being sought or has been issued.”7 Id. California enacted
its version of the Uniform Act, the California Conservatorship Jurisdiction Act
(California Act), in 2016. Ca. Probate Code §§ 1980-2033. Likewise, the
California Act “applies only to court jurisdiction and related topics for adults
for whom the appointment of a [conservator] is being sought or has been
issued.”8 Ca. Probate Code § 1980.
The UAGPPJA provides two ways that an out-of-state
guardianship/conservatorship can be recognized in Pennsylvania. Section
5922 provides for a transfer of the jurisdiction of the guardianship from
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6https://my.uniformlaws.org/committees/community-
home?CommunityKey=0f25ccb8-43ce-4df5-a856-e6585698197 (last visited
March 18, 2019).
7 Conservator is defined in the UAGPPJA as a “person appointed by the court
to administer the property of an adult.” A guardian is defined as “a person
appointed by the court to make decisions regarding the person of an adult.”
20 Pa.C.S. § 5902 (emphasis added).
8 In California a conservatorship pertains to adults, and guardianships pertain
to minors. See Ca. Probate Code §§ 1500-1502.
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another state into Pennsylvania.9 Section 5931 provides for an out-of-state
guardian/conservator to register its guardianship/conservatorship order in
Pennsylvania.10 In this case, McIlwain did not follow either procedure.11
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9 “To confirm transfer of a guardianship or conservatorship transferred to
this Commonwealth . . . the guardian or conservator must petition the court
in this Commonwealth to accept the guardianship or conservatorship. The
petition must include a certified copy of the other state’s provisional order of
transfer.” 20 Pa.C.S. § 5922(a).
10 If a guardian has been appointed in another state and a petition
for the appointment of a guardian is not pending in this
Commonwealth, the guardian appointed in the other state, after
giving notice to the appointing court of an intent to register, may
register the guardianship order in this Commonwealth by filing as
a foreign judgment in a court, in any appropriate judicial district
of this Commonwealth, certified copies of the order and letters of
office. . . . Upon registration of a guardianship or protective order
from another state, the guardian or conservator may exercise in
this Commonwealth all powers authorized in the order of
appointment except as prohibited under the laws of this
Commonwealth, including maintaining actions and proceedings in
this Commonwealth and, if the guardian or conservator is not a
resident of this Commonwealth, subject to any conditions imposed
upon nonresident parties.
20 Pa.C.S. § 5931, 5933(a).
11 Registration appears to apply when the subject of a
guardianship/conservatorship stays in the home state, but the
guardian/conservator needs to act on behalf of the
guardianship/conservatorship in another state. See Uniform Act, p.33.
Transfer appears to apply in the case where a guardian/conservator wishes to
transfer the jurisdiction of the guardianship/conservatorship to a different
state. See Uniform Act, p.28. Because McIlwain did not attempt to register
or transfer the temporary conservatorship prior to her signing of the
arbitration agreement, we do not need to resolve the proper mechanism that
should have been followed in this case.
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While Saber produced a copy of the letters of temporary conservatorship
from California, Saber has not alleged, nor is there any basis to conclude
based on the proceedings below that McIlwain petitioned the court in California
to transfer the conservatorship. In fact, McIlwain states, in her brief,
“[d]efendants produced no evidence, nor is Plaintiff aware of the existence of
any such evidence, that any petition was filed to accept the California
proceedings or that it was properly registered in Pennsylvania pursuant to §
5933.” Appellant’s brief at 15. The authority of the temporary
conservatorship issued in California emanated from the Superior Court of
California. As McIlwain did not follow either of the procedures outlined in the
UAGPPJA, the temporary conservatorship granted in California did not give
McIlwain the authority to sign the arbitration agreement on behalf of Franks.
The Full Faith and Credit clause of the United States Constitution is not
offended, because the underlying judgment of incapacity is not disturbed upon
following the procedures provided in the UAGPPJA. See 20 Pa.C.S. § 5922(g);
see also § 5933(a).
Next, we determine whether, nonetheless, there exists an agency
relationship between McIlwain and Franks that would provide an independent
authority for McIlwain to have executed the arbitration agreement on behalf
of Franks. “It is black letter law that in order to form an enforceable contract,
there must be an offer, acceptance, consideration, or mutual meeting of the
minds.” Walton v. Johnson, 66 A.3d 782, 786 n.3 (Pa. Super. 2013)
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(citation omitted). “As contract interpretation is a question of law, our review
of the trial court’s decision is de novo and our scope is plenary.” Cardinal v.
Kindred Healthcare, Inc., 155 A.3d 46, 50 (Pa. Super. 2017) (citation
omitted).
“Agency is the relationship which results from the consent of one person
that another may act on his behalf.” Lincoln Avenue Industrial Park v.
Norley, 677 A.2d 1219, 1222 (Pa. Super. 1996) (citation omitted). “The
creation of an agency relationship requires no special formalities.” Walton,
66 A.3d at 787 (citation omitted). “The existence of an agency relationship is
a question of fact.” Id. “The party asserting the existence of an agency
relationship bears the burden of proving it by a fair preponderance of the
evidence.” Id.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. Implied authority
exists in situations where the agent’s actions are “proper, usual
and necessary” to carry out express agency. Apparent authority
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. 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.
Walton, 66 A.3d at 786 (citations omitted) (emphasis added).
We find no agency relationship existed between Franks and McIlwain
giving McIlwain the authority to sign the arbitration agreement on behalf of
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Franks. “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.” Walton, 66 A.3d at 787 (citation omitted). It is clear that
there was no express, implied, or apparent authority, nor authority by
estoppel to establish an agency relationship between McIlwain and Franks in
relation to signing the arbitration agreement. Authority for an agency
relationship emanates from the words and actions of the principal, here,
Franks. Saber has not alleged Franks was present when McIlwain signed the
arbitration agreement or gave express consent to McIlwain to sign the
agreement on his behalf. In fact, Saber states that due to Franks’ severe
cognitive defects, he was incapable of making decisions on his own. See
Saber Sur-Sur-Reply Brief and Answer at 3; see also Saber Sur-Sur-Reply,
Ex. G (noting Franks’ admission diagnosis of paranoid schizophrenia and
advanced vascular dementia).
Saber alleges that McIlwain, by her words and conduct, held herself out
as Franks’ agent and Saber was justified in relying on her words and conduct.
Specifically, Saber alleges that because McIlwain signed the admission
agreement, consent for physician care, and authorization and
acknowledgement of receipt on behalf of Franks, she had apparent authority
to sign the arbitration agreement. However, an agent cannot simply, by her
own words, invest herself with apparent authority. Turnway Corp. v. Soffer,
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336 A.2d 871, 876 (Pa. 1975); see also V-Tech Services, Inc. v. Street,
72 A.3d 270, 279 (Pa. Super. 2013). Such authority emanates from the action
of the principal and not the agent. Turnway, 336 A.2d at 876; V-Tech
Services, 72 A.3d at 279. As it is clear that Saber did not rely on the words
or conduct of Franks, no apparent authority exists. Additionally, we do not
assume agency by a mere showing that one person does an act for another.
Walton, 66 A.3d at 787. “Agency cannot be inferred from mere relationships
or family ties.” Wisler v. Manor Care of Lancaster PA, LLC, 124 A.3d 317,
323 (Pa. Super. 2015) (citation omitted).
Saber did not allege it was misled by any words or conduct of Franks.
A party who deals with an agent must “take notice of the nature and extent
of the authority conferred.” Wisler, 124 A.3d at 324 (finding that son with
valid power of attorney did not have authority to sign arbitration agreement
on behalf of resident where nursing home did not ascertain the nature and
extent of son’s purported authority). “Parties are bound at their own peril to
notice limitations upon the grant of authority before them, whether such
limitations are prescribed by the grant’s own terms or by construction of law.”
Id. “If a person dealing with an agent has notice that the agent’s authority is
created or described in a writing which is intended for his inspection, he is
affected by limitations upon the authority contained in the writing, unless
misled by conduct of the principal.” Id. Saber had the duty to confirm the
extent of McIlwain’s purported authority to sign the arbitration agreement as
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Franks’ agent at the time of reliance. Saber neglected to do so at its own
peril.
“The FAA . . . does not require parties to arbitrate when they have not
agreed to do so.” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 293 (2002)
(citation omitted). “Despite national and state policies favoring arbitration, a
party cannot be compelled to arbitrate in the absence of a valid agreement to
do so under either Pennsylvania law or the [FAA].” Washburn v. Northern
Health Facilities, Inc., 121 A.3d 1008, 1015-6 (Pa. Super. 2015) (citation
omitted). “The [FAA] requires courts to place arbitration agreements on equal
footing with all other contracts.” Kindred Nursing Centers Limited
Partnership v. Clark, 137 S. Ct. 1421, 1424 (2017) (citation omitted).
“[T]he existence of an arbitration provision and a liberal policy favoring
arbitration does not require the rubber stamping of all disputes as subject to
arbitration.” Pisano v. Extendicare Homes, Inc., 77 A.3d 651, 661 (Pa.
Super. 2013) (citation omitted). “This is especially true where holding
otherwise would operate against principles of Pennsylvania contract law and
the FAA.” Id.We find that the trial court erred as a matter of law in determining that
McIlwain had the authority to sign the arbitration agreement on behalf of
Franks. Absent an agency relationship, we hold that McIlwain did not have
authority to sign the arbitration agreement on behalf of Franks. We reverse
the trial court’s order bifurcating the survival claims, and remand for further
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proceedings consistent with this opinion. The survival claims are to proceed
in the trial court concurrent with the wrongful death and negligence claims.
Order reversed. Case remanded.
Jurisdiction Relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/22/19
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