Garcia v. KND Development 52, LLC

Filed 12/15/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF
CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
MARIA GARCIA, B301929
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC718221)
v.
KND DEVELOPMENT 52, LLC, et
al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of
Los Angeles County, Peter A. Hernandez, Judge. Affirmed.
Law Offices of Samer Habbas & Associates, Samer
Habbas and Adam Kocaj, for Plaintiff and Respondent.
Giovanniello Law Group, Alexander F. Giovanniello
and Thomas C. Swann, for Defendants and Appellants.
_________________________________________________
INTRODUCTION
Appellants KND Development 52, LLC and THC-
Orange County, LLC (Kindred Hospital Baldwin Park and
Kindred Hospital Los Angeles, respectively) appeal from the
trial court’s order denying their petition to compel
arbitration of a lawsuit brought by respondent Maria Garcia,
individually and as successor in interest to her deceased
husband, Ramiro Garcia, regarding Ramiro’s treatment at
appellants’ hospitals.1 During or soon after the process of
Ramiro’s admission as a patient at Kindred Hospital
Baldwin Park, Ramiro’s son, Mike Garcia, signed an
arbitration agreement, purportedly on Ramiro’s behalf.
Maria did the same at Kindred Hospital Los Angeles. Mike
and Maria also signed other documents during or soon after
Ramiro’s admission. Following Ramiro’s death, allegedly
caused by appellants’ staff, Maria sued appellants for
negligence (in her capacity as Ramiro’s successor in interest)
and wrongful death.
Appellants filed a petition to compel arbitration
pursuant to the arbitration agreements Mike and Maria had
executed. They argued Ramiro had conferred ostensible
1 Because the members of the Garcia family share a surname,
we refer to them by their first names to avoid confusion.
2
authority on Mike and Maria to execute the arbitration
agreements on his behalf, relying on declarations executed
by (1) the supervisor of the employee who signed the
Baldwin Park agreement, and (2) the employee who signed
the Los Angeles agreement. The Baldwin Park supervisor
did not claim to have interacted with Ramiro, and the Los
Angeles employee had no recollection of any interaction with
him. Each declarant inferred from the arbitration
agreements and her understanding of the admission process
that Ramiro had nodded or shook his head in a manner
authorizing the execution of the arbitration agreements on
his behalf. Their inferences were contradicted by Mike and
Maria, who submitted declarations in opposition to the
petition. After a hearing, the trial court found appellants
failed to produce sufficient evidence that Ramiro had
authorized Mike and Maria to execute the arbitration
agreements on his behalf. The court therefore concluded
appellants failed to meet their burden to establish the
existence of an enforceable arbitration agreement, and
denied their petition to compel arbitration.
On appeal, appellants contend the trial court
discriminated against arbitration contracts, in violation of
the Federal Arbitration Act (FAA), in denying their petition
to enforce the arbitration agreements signed by Mike and
Maria. They fault the court for holding them to an
evidentiary burden to show Ramiro authorized the execution
of the arbitration agreements without questioning the
validity of the other documents signed by Mike and Maria
3
during or soon after Ramiro’s admission (the validity of
which was not at issue on appellants’ petition).
We affirm. Substantial evidence supported the trial
court’s conclusion that appellants failed to meet their burden
to establish the existence of an enforceable arbitration
agreement. In reaching that conclusion, the court relied on
generally applicable law conditioning the validity of an
arbitration agreement executed by a purported agent -- like
any other contract executed by a purported agent -- on an
adequate evidentiary showing that the agreement falls
within the scope of authority, if any, conferred by the
principal. The court did not apply this law in a fashion
disfavoring arbitration contracts, and thus did not violate
the FAA.
FACTUAL BACKGROUND
A. Ramiro’s and Maria’s Complaints
Ramiro presented for treatment at Kindred Hospital
Baldwin Park on February 9, 2018. In April 2018, he was
transferred to a third-party hospital, where he received
surgery for gallbladder stones. On May 25, 2018, he
presented for rehabilitation services at Kindred Hospital Los
Angeles. Three days later (on May 28, 2018), he was
transferred back to Kindred Hospital Baldwin Park. In
August 2018, Ramiro sued appellants, alleging that their
staff failed to properly turn him in his hospital beds, causing
him to develop pressure sores. He raised the following
causes of action: (1) negligent retention, supervision, and
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training; (2) negligence; and (3) violation of the Elder Abuse
and Dependent Adult Civil Protection Act, Welfare and
Institutions Code section 15600 et seq.
In December 2018, appellants filed a petition to compel
arbitration. In January 2019, before any response to the
petition was filed, the parties filed a stipulation that Ramiro
had recently died, that the petition was withdrawn, and that
an amended complaint (attached as an exhibit) would be
filed. The amended complaint, filed in February 2019, was
largely identical to the original complaint, but specified that
Ramiro’s claims were now being brought through his widow
Maria as his successor in interest, and added a wrongful
death claim brought by Maria personally.
B. Appellants’ Petition
On March 25, 2019, appellants filed a new petition to
compel arbitration. They relied on two arbitration
agreements: (1) a February 10, 2018 “Voluntary Alternative
Dispute Resolution (ADR) Agreement,” signed by Ashley
Tirado on behalf of Kindred Hospital Baldwin Park, and by
Ramiro’s son Mike as Ramiro’s purported “Legal
Representative”; and (2) a May 26, 2018 agreement of the
same kind, signed by Iris Trapp on behalf of Kindred
Hospital Los Angeles, and by Maria as Ramiro’s purported
legal representative. Each agreement stated at the outset
(in italics) that signing was “not a precondition to the
furnishing of services,” and stated at the end (in boldface),
“Please remember, this Agreement is optional.”
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Appellants concurrently filed a declaration executed by
Christine Saltonstall, the chief financial officer of Kindred
Hospital Baldwin Park. Saltonstall declared she was the
direct supervisor of Tirado, the Admitting Associate who
signed the Baldwin Park arbitration agreement. She further
declared that she was familiar with Tirado’s custom, habit,
and practice, and that she had no reason to believe Tirado
had deviated from them when interacting with Ramiro. She
stated Tirado would present the admission documents,
including the arbitration agreement, to each patient or
patient’s authorized representative, and explain the
documents “if requested.” She indicated that Tirado would
approach the patient’s next of kin as an authorized
representative only if the patient first declined to personally
execute the admission documents and “affirmatively state[d]
with a nodding or shaking of the head that the next of kin
ha[d] authority to execute the admission paperwork . . . .”
Based on her familiarity with Tirado’s custom, habit, and
practice, and her review of specified documents, Saltonstall
declared, “it is clear [Ramiro] gave his son, Mike Garcia,
authority to execute the admission paperwork.”
Appellants also submitted a similar declaration
executed by Trapp, the Kindred Hospital Los Angeles
receptionist who signed the Los Angeles arbitration
agreement on the hospital’s behalf. Trapp declared she
“d[id] not specifically recall the circumstances surrounding
the execution” of the agreement. She therefore relied on her
custom, habit, and practice, which she described much as
6
Saltonstall described Tirado’s custom, habit, and practice
(e.g., she identified the arbitration agreement as one of the
admission documents she would present to each patient or
patient’s authorized representative and, “if requested,”
explain). She declared, “Again, while I do not recall the
specifics regarding [Ramiro], it is my custom, habit and
practice, to only approach the next of kin if the patient
responded in the affirmative. Here, because the admission
documents contain the signature of [Ramiro]’s wife, Maria
Garcia, it is clear that [Ramiro], through a nodding or
shaking of the head, gave me authority to contact Ms. Garcia
for this purpose.”
In their brief in support of the petition, appellants
relied on Saltonstall’s and Trapp’s declarations to argue
Ramiro had authorized Mike and Maria to execute the
arbitration agreements on his behalf. They further argued,
“[B]ecause Plaintiffs accept the proposition that both Mike
and Maria Garcia had the authority to execute the various
admission documents that now form the basis of this
litigation, Plaintiffs are also required to accept that both
individuals had the authority to execute the ADR
Agreements.” They relied on Kindred Nursing Centers Ltd.
Partnership v. Clark (2017) 137 S.Ct. 1421 (Kindred),
asserting Kindred “makes clear that if the agent had
authority to execute some contracts, the agent had authority
to execute all contracts.”
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C. Maria’s Opposition and Appellants’ Reply
In opposing appellants’ petition, Maria argued, inter
alia, that appellants had failed to meet their burden to
establish the existence of an enforceable arbitration
agreement, as they had failed to produce evidence that
Ramiro had authorized Mike and Maria to execute the
arbitration agreements on his behalf. Maria relied, inter
alia, on Flores v. Evergreen at San Diego, LLC (2007) 148
Cal.App.4th 581 (Flores), which she described as “directly on
point.”2
Maria concurrently submitted declarations executed by
Mike and herself. Mike and Maria expressly contradicted
2 In Flores, as part of the process of admitting a patient into
a skilled nursing facility, the patient’s husband signed various
documents, including two arbitration agreements. (Flores, supra,
148 Cal.App.4th at 585.) The husband did not hold a power of
attorney, but signed the arbitration agreements as the patient’s
purported agent. (Ibid.) The patient and her husband later sued
the facility, which filed a petition to compel arbitration. (Id. at
585-586.) The trial court denied the petition on the ground that
the facility had failed to present evidence that the patient had
engaged in any conduct causing the facility to believe her
husband had authority to execute the arbitration agreements on
her behalf. (Id. at 586) The Court of Appeal affirmed, holding
the facility had failed to meet its “burden to show the validity of
the arbitration agreement based on [the patient’s] express or
implied consent to have her husband act as her agent.” (Id. at
589.) The court held insufficient the mere fact that the husband
signed the arbitration agreement during the admission process,
in the absence of evidence that the patient engaged in conduct
manifesting consent to the signing on her behalf. (Id. at 588.)
8
Saltonstall and Trapp, respectively, asserting that the
factual scenarios inferred by Saltonstall and Trapp did not
occur. Mike declared he was asked to sign documents on
Ramiro’s behalf a day after Ramiro had been admitted to
Kindred Hospital Baldwin Park and had begun receiving
care. He further declared he had no recollection of any agent
of the hospital calling his attention to the arbitration
agreement or explaining its significance. Finally, he
declared, “I never represented to anyone at Kindred Hospital
Baldwin Park that I was authorized to execute documents on
behalf of my father. As well, at no time did my father make
representations to Kindred Hospital Baldwin Park that I
was authorized to execute documents on his behalf.” Maria’s
declaration was nearly identical with respect to the events at
Kindred Hospital Los Angeles.
In their reply brief, appellants again failed to identify
any evidence, aside from Saltonstall’s and Trapp’s
declarations, that Ramiro had authorized Mike and Maria to
execute the arbitration agreements on his behalf. They did
not address Maria’s reliance on Flores.
D. Hearing and Ruling
At the August 14, 2019 hearing on the petition, the
trial court noted it had issued a tentative ruling denying the
petition and, after briefly hearing argument from appellants’
counsel, asked him to identify evidence of Ramiro’s consent
to Mike’s and Maria’s execution of the arbitration
agreements on his behalf. Appellant’s counsel argued that
9
at each hospital, Ramiro “gave a head nod or head shake to
indicate . . . that his next of kin was authorized to sign” the
documents “within the admission packet,” including the
arbitration agreements. Maria’s counsel argued: (1)
appellants’ evidence was insufficient to establish that
Ramiro nodded or shook his head; and (2) even assuming
Ramiro nodded or shook his head in a manner manifesting
consent to the execution of some of the documents in the
admission packet, appellants’ evidence was insufficient to
show he thereby also manifested consent to the execution of
the arbitration agreements.
The court adopted its tentative ruling denying the
petition on the ground that appellants had failed to meet
their burden to prove the existence of a valid arbitration
agreement, as they had produced insufficient evidence that
Mike and Maria had authority to execute the arbitration
agreements on Ramiro’s behalf. In its written ruling, the
court stated the facts in this case “fall directly within” the
legal principles applied in Flores. The court found
insufficient the evidence that Mike and Maria signed the
agreements as Ramiro’s purported representatives because
“agency cannot be created by the conduct of the agent alone;
instead, conduct by the principal is essential to create the
agency.” The court further reasoned, “There is no evidence
in Defendants’ motion that demonstrates that [Ramiro] had
agreed to provide a health care durable power of attorney to
either [Maria], his son or anyone else. The closest that
Defendants come to demonstrate this is the assertion that
10
[Ramiro] may have indicated that he wished [Maria] [to] fill
out the admission documents through nodding or shaking
his head. (See Trapp Decl., ¶ 5.) However, nowhere do
Defendants indicate that they told [Ramiro], through their
agents, that one of these documents would be a voluntary
ADR agreement or that [Ramiro] understood what a
voluntary ADR agreement entailed.”
Appellants timely appealed the order denying their
petition.
DISCUSSION
Appellants contend the trial court discriminated
against arbitration contracts, in violation of the FAA, in
denying their petition to enforce the arbitration agreements
signed by Mike and Maria.
A. Principles
“‘The party seeking to compel arbitration bears the
burden of proving the existence of a valid arbitration
agreement.’” (Lopez v. Bartlett Care Center, LLC (2019) 39
Cal.App.5th 311, 317 (Lopez).) “‘Even the strong public
policy in favor of arbitration does not extend to those who
are not parties to an arbitration agreement or who have not
authorized [an agent] to act for them in executing such an
agreement.’” (Young v. Horizon West, Inc. (2013) 220
Cal.App.4th 1122, 1128 (Young).) “‘[A]n agency cannot be
created by the conduct of the agent alone; rather, conduct by
the principal is essential to create the agency.’” (Lopez,
11
supra, at 318; see also Civ. Code, § 2315 [“An agent has such
authority as the principal, actually or ostensibly, confers
upon him”]; id., § 2316 [“Actual authority is such as a
principal intentionally confers upon the agent, or
intentionally, or by want of ordinary care, allows the agent
to believe himself to possess”]; id., § 2317 [“Ostensible
authority is such as a principal, intentionally or by want of
ordinary care, causes or allows a third person to believe the
agent to possess”].) A person who chooses to pursue a
contract with a principal through a purported agent “takes
the risk not only of ascertaining whether the person with
whom he is dealing is the agent, but also of ascertaining the
scope of his powers.” (Young, supra, at 1134.)
The FAA “requires courts to place arbitration
agreements “‘on equal footing with all other contracts.’”
(Kindred, supra, 137 S.Ct. at 1424.) Any state law rule that
“singles out arbitration agreements for disfavored
treatment” violates the FAA. (Ibid.) “The FAA thus
preempts any state rule discriminating on its face against
arbitration . . . [and] also displaces any rule that covertly
accomplishes the same objective by disfavoring contracts
that (oh so coincidentally) have the defining features of
arbitration agreements.” (Id. at 1426.) But a court may
“invalidate an arbitration agreement based on ‘generally
applicable contract defenses’” without violating the FAA, so
long as it does not apply a generally applicable defense “‘in a
fashion that disfavors arbitration.’” (Id. at 1426, 1428.)
12
We review de novo the legal conclusions underlying a
trial court’s denial of a petition to compel arbitration. (Lopez,
supra, 39 Cal.App.5th at 317.) We review the court’s factual
conclusions under the substantial evidence standard. (Ibid.)
Under that standard, “when the trier of fact has expressly or
implicitly concluded the party with the burden of proof did
not carry the burden and that party appeals, . . . ‘“the
question for a reviewing court becomes whether the evidence
compels a finding in favor of the appellant as a matter of law.
[Citations.] Specifically, the question becomes whether the
appellant’s evidence was (1) ‘uncontradicted and
unimpeached’ and (2) ‘of such a character and weight as to
leave no room for a judicial determination that it was
insufficient to support a finding.’”’” (Patricia A. Murray
Dental Corp. v. Dentsply Internat., Inc. (2018) 19
Cal.App.5th 258, 270.)
B. Analysis
Substantial evidence supported the trial court’s
conclusion that appellants failed to meet their burden to
show that Ramiro, through his conduct, conferred authority
on Mike and Maria to execute the arbitration agreements on
his behalf. Appellants’ evidence of Ramiro’s conduct
consisted solely of the declarations executed by Saltontsall
and Trapp, which met neither of the two standards
necessary to compel a finding in appellants’ favor as a
matter of law. (See Patricia A. Murray Dental Corp. v.
Dentsply Internat., Inc., supra, 19 Cal.App.5th at 270.) First,
13
the evidence was contradicted; Mike and Maria declared that
the factual scenarios inferred by Saltonstall and Trapp did
not occur, and that Ramiro made no representations to
appellants’ agents that Mike and Maria were authorized to
execute documents on his behalf. Second, even disregarding
contrary evidence, Saltonstall’s and Trapp’s declarations
lacked the character and weight necessary to leave no room
for a judicial determination that they were insufficient.
Saltonstall did not claim to have interacted with Ramiro,
and Trapp had no recollection of any interaction with him.
Thus, to the extent the declarations constituted evidence of
Ramiro’s conduct, they were based on inferences derived
solely from documents and the declarants’ asserted
understanding of how such documents were typically
executed. The court was not compelled, as a matter of law,
to accept those inferences about Ramiro’s conduct.3 (See
Young, supra, 220 Cal.App.4th at 1134 [trial court was
entitled to reject as insufficient declaration of admission
coordinator, based on her “‘custom and practice,’” that she
3 Contrary to appellants’ implication, the court made no
finding that Ramiro nodded or shook his head in a manner
authorizing Mike and Maria to execute the non-arbitration
documents in the admission packet (the validity of which was not
at issue). The court merely observed that Trapp’s “assertion”
that Ramiro “may” have nodded or shook his head was the
evidence that came “closest” to showing Ramiro had conferred
authority comparable to a health care durable power of attorney.
The court’s phrasing implied a finding that none of appellant’s
evidence showed Ramiro had conferred such authority.
14
“‘would have’” confirmed with patient that patient’s
daughter had authority to sign arbitration agreement on
patient’s behalf].)
As the trial court recognized, Flores is on point. (See
Flores, supra, 148 Cal.App.4th at 585-589 [trial court
properly denied skilled nursing facility’s petition to compel
arbitration, notwithstanding patient’s husband’s execution of
arbitration agreements during admission process, where
facility failed to meet its burden to show patient had
engaged in conduct causing facility to believe her husband
had authority to execute arbitration agreements].) More
recent cases, decided on similar facts, also support the
court’s conclusion. (See Young, supra, 220 Cal.App.4th at
1133 [following Flores; “appellants offer nothing to suggest
that plaintiff acted in any way to cause the facility’s
admission coordinator to believe that plaintiff’s daughter
was authorized to sign an arbitration agreement on
plaintiff's behalf”]; Lopez, supra, 39 Cal.App.5th at 317-320
[substantial evidence supported trial court’s finding that
patient’s daughter lacked authority to execute arbitration
agreement on patient’s behalf, where daughter contradicted
skilled nursing facility’s evidence that patient verbally
authorized her to sign and that she signed in patient’s
presence].)
Appellants address the foregoing caselaw only by
implication, arguing that Kindred, supra, 137 S.Ct. 1421,
established that the FAA preempts the state law on which
Flores and related cases relied. Not so.
15
In Kindred, the United States Supreme Court reviewed
the Kentucky Supreme Court’s decision in two consolidated
cases, Clark and Wellner. (Kindred, supra, 137 S.Ct. at
1425.) Each case involved an arbitration agreement
executed on behalf of a nursing home patient as part of the
process of “complet[ing] all necessary paperwork” for
admission, by a family member who held a power of attorney
affording her “broad authority to manage [the patient’s]
affairs.” (Ibid.) The Kentucky Supreme Court held that the
Wellner power of attorney was “insufficiently broad” to give
the agent the authority to execute an arbitration agreement.
(Id. at 1429.)4 Though the court held that the Clark power of
attorney, in contrast, was “sufficiently broad to cover
executing an arbitration agreement,” it nevertheless
invalidated the Clark arbitration agreement pursuant to a
newly devised “clear-statement rule,” under which a power
of attorney could not authorize execution of an arbitration
agreement unless it expressly referred to the waiver of the
principal’s rights of access to the courts and to trial by jury.
(Id. at 1425-1426, 1429.)
The United States Supreme Court held that this
clear-statement rule was “too tailor-made to arbitration
agreements -- subjecting them, by virtue of their defining
trait, to uncommon barriers -- to survive the FAA’s edict
4 The Wellner power of attorney authorized the agent to,
inter alia, “‘institute legal proceedings’ and make ‘contracts of
every nature in relation to both real and personal property.’”
(Kindred, supra, 137 S.Ct. at 1425.)
16
against singling out those contracts for disfavored
treatment.” (Kindred, supra, 137 S.Ct. at 1427.) The court
therefore reversed the judgment in the Clark case, which
was “exclusively” based on the clear-statement rule. (Id. at
1429.) However, rather than reverse the judgment in the
Wellner case, the court instructed the Kentucky Supreme
Court to determine, on remand, whether the clear-statement
rule had influenced its prior interpretation of the Wellner
power of attorney as insufficiently broad to authorize the
agent to execute an arbitration agreement. (Ibid.) The court
noted, “If that interpretation of the document is wholly
independent of the [Kentucky Supreme Court’s]
clear-statement rule, then nothing we have said disturbs it.”
(Ibid.) On remand, the Kentucky Supreme Court adhered to
its prior conclusion that the Wellner power of attorney did
not confer authority to execute an arbitration agreement,
explaining it had reached this conclusion wholly
independently of the clear-statement rule. (Kindred Nursing
Centers Limited Partnership v. Wellner (Ky. 2017) 533
S.W.3d 189, 194.) The United States Supreme Court denied
review. (Kindred Nursing Centers Ltd. Partnership v.
Wellner (2018) 139 S.Ct. 319.)
As shown by its disposition in the Wellner case, the
Supreme Court has recognized that the FAA does not
preempt generally applicable state law conditioning the
validity of an arbitration agreement executed by a purported
agent -- like any other contract executed by a purported
agent -- on an adequate evidentiary showing that the
17
agreement falls within the scope of authority, if any,
conferred by the principal. Here, the trial court relied on
such generally applicable law. It neither articulated nor
implied any requirement applicable only to arbitration
contracts, or to contracts sharing their defining traits. We
cannot infer discrimination from the mere fact that the
court’s ruling was limited to appellants’ arbitration
agreements, as only those agreements were at issue on
appellants’ petition. Appellants identify no evidence that the
court would have reached a different conclusion had they
sought, on a similar evidentiary showing, to compel
enforcement of a contract of a different nature. In sum, the
court’s conclusion was supported by substantial evidence and
consistent with the FAA.
18
DISPOSITION
The order is affirmed. Maria is entitled to her costs on
appeal.
CERTIFIED FOR PUBLICATION
MANELLA, P. J.
We concur:
WILLHITE, J.
COLLINS, J.
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