Sherwood Nursing and Rehabilitation Center, Inc. Sherwood Nursing Center, Inc. Central Arkansas Nursing Centers, Inc. David Norsworthy Michael S. Morton Kindred Hospice Services, LLC Odyssey Healthcare Operating A, Lp, D/B/A Kindred Hospice II v. Susan Cazort, as Special Administratrix of the Estate of Lena Mozelle McGaughey, and on Behalf of the Wrongful Death Beneficiaries of Lena Mozelle McGaughey

Cite as 2022 Ark. App. 65ARKANSAS COURT OF APPEALS
DIVISION IV
No. CV-20-617
SHERWOOD NURSING AND Opinion Delivered February 9, 2022
REHABILITATION CENTER, INC.;
SHERWOOD NURSING CENTER, APPEAL FROM THE PULASKI
INC.; CENTRAL ARKANSAS NURSING COUNTY CIRCUIT COURT,
CENTERS, INC.; DAVID TWELFTH DIVISION
NORSWORTHY; MICHAEL S. [NO. 60CV-19-8758]
MORTON; KINDRED HOSPICE
SERVICES, LLC; ODYSSEY HONORABLE ALICE S. GRAY, JUDGE
HEALTHCARE OPERATING A, LP,
D/B/A KINDRED HOSPICE II
APPELLANTS
V.
AFFIRMED IN PART; DISMISSED AS
SUSAN CAZORT, AS SPECIAL MOOT IN PART
ADMINISTRATRIX OF THE ESTATE
OF LENA MOZELLE MCGAUGHEY,
DECEASED, AND ON BEHALF OF THE
WRONGFUL DEATH BENEFICIARIES
OF LENA MOZELLE MCGAUGHEY
APPELLEES
STEPHANIE POTTER BARRETT, Judge
Sherwood Nursing and Rehabilitation Center, Inc., d/b/a Sherwood Nursing Center
and numerous other associated parties (Sherwood Appellants); and Kindred Hospice
Services, LLC, and Odyssey Healthcare Operating A, LP, d/b/a Kindred Hospice II (Kindred
Appellants) bring this interlocutory appeal from an order of the Pulaski County Circuit
Court denying the Sherwood Appellants’ motion to compel arbitration of a negligence
complaint filed by appellee Susan Cazort, as special administratrix of the estate of Lena
Mozelle McGaughey (Mozelle), and denying the Kindred Appellants’ motion to adopt and
join the motion to compel arbitration. Appellants contend that the circuit court erred in
refusing to enforce a valid arbitration agreement. We find no error and affirm.
The facts pertinent to this appeal involve the admission and arbitration agreements
that were executed when Mozelle, Susan’s grandmother, began her residency at Sherwood
Nursing Center and a “Declaration and Durable Power of Attorney” (POA) executed by
Mozelle in favor of her daughter, Sue Nance, almost four years prior to her admission to
Sherwood Nursing Center on September 11, 2013. Mozelle, the actual resident, did not
execute either the admission agreement or the arbitration agreement. There is an admission
agreement that indicates that Mozelle agreed to abide by the terms and conditions listed;
however, the agreement submitted is incomplete as there is no person listed as the
“Responsible Party,” there is no signature from any party, and it abruptly ends in the middle
of a section outlining “financial understandings.”
Sue signed the arbitration agreement as the “Responsible Party” and wrote
“Daughter” on the line labeled “Responsible Party’s Relationship to Resident.” There was
also a place for a witness signature if the document was signed by a “Responsible Party,” but
no witness signature was included. The arbitration agreement defines “responsible party” as
your legal guardian, if one has been appointed, your attorney-in-fact, if you have
executed a power of attorney, or some other individual or family member who agrees
to assist the Facility in providing for your health, care and maintenance.
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Also in the arbitration agreement, the following sentence appears with no checkmark beside
it:
____(Check if applicable): a copy of my guardianship papers, durable power of
attorney or other documentation has been provided to the Facility and is attached.
The arbitration agreement did not identify Mozelle anywhere in the agreement. “-
McGaughey” is handwritten on the top right-hand corner of the document. The arbitration
agreement states that it is an “addendum to and part of the admission agreement” and a
“condition of admission” that will govern any and all claims, disputes, and controversies that
arise out of or in connection with any service or health care provided by Sherwood Nursing
to the resident that would constitute a cause of action in a court of law.
The 2013 POA appointed Sue to be Mozelle’s healthcare proxy to make healthcare
decisions for Mozelle and to decide “whether life-sustaining treatment should be withheld
or withdrawn.” The POA’s expressed intention was to confer authority on Sue to exercise
all medical decisions, whether at the end of life or not, notwithstanding any subsequent
disability or incapacity. The POA provided that all acts done by her lawful attorney in fact
under the “Living Will and Durable Medical Power of Attorney” during any period of her
disability or incapacity would be binding on Mozelle.
Mozelle was a resident of Sherwood Nursing Center from May 26, 2017, until her
death on July 1, 2018. Susan was appointed special administratrix of Mozelle’s estate on
October 15, 2018. She filed the negligence complaint against the Sherwood Appellants and
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Kindred Appellants1 on December 9, 2019. In her complaint, she alleged that as a result of
the appellants’ negligence, Mozelle’s physical health deteriorated in an accelerated manner
resulting in falls, infections, skin issues, dehydration, pain, suffering, and untimely death.
The Sherwood Appellants answered the complaint denying the material allegations of
Susan’s complaint and asserted that the dispute was governed by the arbitration agreement
signed when Mozelle entered the facility. The Kindred Appellants answered the complaint
denying the material allegations against them.
The Sherwood Appellants filed a motion to compel arbitration on January 24, 2020,
contending that the admission agreement and arbitration agreement encompassed Susan’s
claims against it. They argued that Sue had the authority to bind Mozelle to both agreements
under the POA executed on September 11, 2013. Susan filed a response on February 14,
denying the validity and enforceability of the arbitration agreement because Sue lacked the
authority to execute the arbitration agreement on Mozelle’s behalf. On March 11, 2020, the
Kindred Appellants filed a motion to adopt and join the Sherwood Appellants’ motion to
compel arbitration alleging that the terms of the arbitration agreement were broad enough
to cover the “services or health care” that they provided to Mozelle during the end of her
residency even though they were not a party to the agreement. Susan filed a response on
May 19, denying the validity and enforceability of the arbitration agreement and arguing that
1
The Kindred Appellants provided hospice services to the Sherwood Appellants on
an independent-contractor basis.
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the “services or health care” covered under the agreement did not cover the services provided
by the Kindred Appellants.
After a hearing on the motion to compel arbitration and motion to adopt and join
motion to compel arbitration, the circuit court rejected the both the Sherwood Appellants’
and the Kindred Appellants’ positions and made the following findings:
1. The Nursing Home Defendants’ Motion to Compel Arbitration is
DENIED for the following reasons:
a. The Nursing Home Defendants failed to meet their burden of proof
that the entire Admission Agreement that was filed as an Exhibit to
the Motion was a full and complete signed agreement.
b. The Nursing Home Defendants failed to meet their burden of proof
that Sue Nance had the authority to bind Lena Mozelle McGaughey
to the Arbitration Agreement because there is no evidence that the
Sue Nance [sic] used a durable power of attorney to admit Lena
McGaughey into the nursing home. The court finds that at the
time of admission, Sue Nance was acting in her capacity as a
daughter and, thus, could not bind Lena McGaughey to the
arbitration agreement.
c. Even if the Nursing Home Defendants relied on the Durable
Medical Power of Attorney of Lena Mozelle McGaughey, that
Durable Power of Attorney did not give Sue Nance the authority to
bind Lena Mozelle McGaughey to the Arbitration Agreement.
d. That the Nursing Home Defendants failed to meet their burden of
proof to show that the springing Durable Medical Power of
Attorney of Lena Mozelle McGaughey was: (1) in effect on May 25,
2017; (2) that Lena Mozelle McGaughey meet [sic] the conditions
for the Durable Medical Power of Attorney to be in effect on May
25, 2017; and/or (3) pursuant to Arkansas Code Annotated 28-68-
109, the Durable Medical Power of Attorney was in effect on May
25, 2017.
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2. Kindred Defendants’ Motion to Adopt and Join the Motion to Compel
Arbitration is DENIED because the Kindred Defendants failed to meet their burden
of proof that they, as nonsignatories to the arbitration agreement have the right to
compel arbitration to the facts of the case.
The Sherwood Appellants and Kindred Appellants timely appealed2.
Our court reviews a circuit court’s order denying a motion to compel arbitration de
novo on the record. Hickory Heights Health & Rehab., LLC v. Hines, 2020 Ark. App. 55, 593
S.W.3d 506. Arbitration is simply a matter of contract between parties. Id. Whether a
dispute should be submitted to arbitration is a matter of contract construction, and we look
to the language of the contract that contains the agreement to arbitrate and apply state-law
principles. Id. The same rules of construction and interpretation apply to arbitration
agreements as apply to agreements generally. Id. Therefore, we seek to give effect to the
parties’ intent as evidenced by the arbitration agreement itself. Id. The construction and
legal effect of an agreement to arbitrate are to be determined by this court as a matter of law.
Id.Generally, the terms of an arbitration contract do not apply to those who are not
parties to the contract. Innisfree Health and Rehab, LLC v. Titus, 2021 Ark. App. 403, ___
S.W.3d ___. In Arkansas, the presumption is that the parties contract only for themselves;
thus, a contract will not be construed as having been made for the benefit of a third party
unless it clearly appears that such was the intention of the parties. Id.2
An order denying a motion to compel arbitration is immediately appealable under
Rule 2(a)(12) of the Arkansas Rules of Appellate Procedure–Civil and Ark. Code Ann. § 16-
108-228(a)(1) (Repl. 2016).
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I. The Sherwood Appellants
The Sherwood Appellants’ first point on appeal is that there was a valid arbitration
agreement as a matter of law. We must first determine whether Sue signed with the authority
to bind Mozelle to the arbitration agreement. In the present appeal, the parties to the
arbitration agreement are the “Facility” (Sherwood Nursing and Rehabilitation Center) and
Sue as the “Resident’s Responsible Party.” The absence of the identity of the “Resident” in
the arbitration agreement creates ambiguity in the identity of the parties. There is nothing
in the record to explain who wrote the handwritten “-McGauhey” in the top right-corner of
the arbitration agreement or why. In addition, Sue indicated that she was signing the
agreement as Mozelle’s “Daughter.” Neither party marked the space indicating that she was
acting pursuant to any legal authority, such as a guardianship or power of attorney.
When a third party signs an arbitration agreement on behalf of another, as was done
in this case, the court must determine whether the third party was clothed with authority to
bind the other person to arbitration. Innisfree Health & Rehab, LLC v. Jordan, 2020 Ark. App.
518, 5–6 (2020). Here, Sherwood Nursing has the burden of proving an agency relationship.
Pine Hills Health and Rehab., LLC v. Talley, 2018 Ark. App. 131, 546 S.W.3d 492. The
arbitration agreement does not indicate that Sue signed as her mother’s power of attorney
or that she had any legal authority to bind her. Agency is not presumed, and if there is
uncertainty or ambiguity in an agreement or it is more susceptible to more than one
reasonable construction, our courts construe it most strongly against the party who drafted
it. Id. Because we hold that there is ambiguity in the agreement before us, we construe this
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contract most strongly against the Sherwood Appellants and affirm the circuit court’s
conclusion that Sue did not sign in a representative capacity with the legal authority to bind
Mozelle.
The Sherwood Appellants’ second point on appeal is that Sue’s signature on the
arbitration agreement bound Mozelle to its terms because the September 11, 2013 POA
granted Sue authority to sign the arbitration agreement, and Sherwood Nursing’s
determination that Mozelle lacked capacity to make her own decisions triggered the POA.
The Sherwood Appellants attempt to distinguish the case at issue by acknowledging that this
court’s decision in Jordan found the lack of a checkmark on the space indicating that a power
of attorney had been provided was fatal to the validity of the arbitration agreement; however,
they claim that because Sue signed as the “Responsible Party”—defined within the agreement
as “your attorney in fact, if you have executed a power of attorney”—that should be enough
to establish that Sue had the authority to bind Mozelle to arbitration.
In Jordan, the resident, Kenneth Jordan, executed a power of attorney in favor of his
wife, Reba Jordan. Jordan, 2020 Ark. App. 518. As in the present case, the arbitration
agreement identified Reba as the resident’s “Responsible Party,” and it was signed by Reba
as the resident’s “Spouse.” Moreover, as in the present case, the agreement contained a
space—which was left blank—that was to be checked if applicable if the Responsible Party
provided the facility with a copy of the power of attorney, guardianship papers, or other legal
documents. The circuit court in Jordan found the arbitration agreement unenforceable
because Reba had signed the arbitration agreement in her capacity as Kenneth’s spouse, not
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as his power of attorney—even though she held a valid power of attorney—and the nursing
home did not check the blank indicating that a power of attorney had been provided. Id.Our court affirmed the circuit court’s order, stating that there was no clear indication
anywhere in the arbitration agreement to demonstrate whether Reba was signing in an
individual capacity or in a representative capacity, and neither party marked the space
indicating that Reba was acting under any legal authority, such as a power of attorney.
The Sherwood Appellants argue that the language of the POA “specifically granted
to Ms. Nance authority ‘exercisable for all medical decisions, whether at the end of life or
not, notwithstanding my subsequent disability or incapacity and all acts by my lawful
attorney in fact under this Living Will and Durable Medical Power of Attorney . . . will be
binding on me,’” which provided Sue with the requisite authority to bind Mozelle to the
arbitration agreement. This argument is unpersuasive. Here, the POA does not grant
authority to Sue for any nonmedical decisions. The plain reading of the instrument clearly
reads “all medical decisions.” The nature and extent of an agent’s authority must be
ascertained from the power-of-attorney instrument. Courtyard Gardens Health v. Williamson,
2016 Ark. App. 606, 509 S.W.3d 685. Our court has found a power of attorney that
included authority to make health-care decisions did not include the authority to agree to
arbitrate. Id. Finally, there is nothing in this record establishing that the POA was in effect
on May 25, 2017, the day of Mozelle’s admission, nor any indication in our record that the
POA was provided to Sherwood Nursing Center at the time of Mozelle’s admission to the
nursing home or when the relevant documents were signed.
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Applying our reasoning in Jordan to the present case, we hold that Sue was signing in
her individual capacity as a daughter and not in a representative capacity. The Sherwood
Appellants have failed in their burden to prove an agency relationship such that Sue signed
in a representative capacity with the legal authority to bind Mozelle or that the POA was in
effect at the time of admission or that it provided Sue the authority to legally bind Mozelle.
Accordingly, we affirm the circuit court’s order denying the Sherwood Appellants’ motion
to compel arbitration.
II.
The Kindred Appellants
The Kindred Appellants’ entire argument on appeal assumes that a valid agreement
to arbitrate existed between the parties. Our court disagrees and has affirmed the circuit
court’s order denying the Sherwood Appellants’ motion to compel arbitration on the ground
that a valid agreement does not exist between the parties. Even assuming arguendo that a
valid agreement existed, the Kindred Appellants’ argument would fail because they were not
a party to the agreement. Stipanuk v. Williams, 2018 Ark. App. 319, 552 S.W.3d 34. We
dismiss the Kindred Appellants’ appeal as moot.
Affirmed in part; dismissed as moot in part.
ABRAMSON and BROWN, JJ., agree.
Hardin, Jesson & Terry PLC, by: Jeffrey W. Hatfield, Kynda Almefty, Carol Ricketts,
Kirkman T. Dougherty, and Stephanie I. Randall, for Sherwood appellants.
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Wright, Lindsey & Jennings LLP, by: Jeffrey L. Singleton and Kristen S. Moyers, for Kindred
appellants.
Rainwater, Holt & Sexton, P.A., by: Jeff R. Priebe, for appellee.
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