Maureen Maynard, as Personal Representative of the Estate of Frank Cavazos v. Golden Living in its own capacity and d/b/a Golden Living Center-Sycamore, and Anonymous M.D.

FILED
Jul 21 2016, 6:02 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Kirk R. Jocham Norris Cunningham
Doehrman Buba Angela M. Fox
Indianapolis, Indiana Hall, Render, Killian, Heath &
Lyman, PC
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Maureen Maynard, as Personal July 21, 2016
Representative of the Estate of Court of Appeals Case No.
Frank Cavazos, 34A04-1512-CT-2153
Appellant-Plaintiff, Appeal from the Howard Superior
Court
v. The Honorable Douglas A. Tate,
Judge
Golden Living in its own Trial Court Cause No.
capacity and d/b/a Golden 34D03-1407-CT-12
Living Center–Sycamore, et al.,
and
Anonymous, M.D., and
Anonymous Primary Care,
Interested Parties,
Appellees-Defendants
Mathias, Judge.
Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016 Page 1 of 14
[1] Maureen Maynard (“Maynard”) as personal representative of the Estate of
Frank Cavazos (“Cavazos”) filed a complaint in Howard Superior Court
alleging negligence and breach of contract by GGNSC Kokomo LLC d/b/a
Golden LivingCenter-Sycamore Village and Hendricks Regional Health d/b/a
Golden LivingCenter-Sycamore Village (“Golden Living”). Golden Living filed
a motion to dismiss, demand for arbitration, and motion to compel arbitration,
which the trial court later granted after a hearing on the matter was held.
Maynard now brings this interlocutory appeal and argues that the trial court
erred in granting Golden Living’s motion to dismiss, demand for arbitration,
and motion to compel arbitration.
[2] We affirm.
Facts and Procedural History
[3] On or around July 18, 2011, Cavazos became a resident of Golden Living after
he executed an admission agreement. The agreement states in pertinent part:
I. Preamble
This Admission Agreement is a legally binding contract that
defines the rights and obligations of each person (or party) who
signs it. Please read this Agreement carefully before you sign it. If
you have any questions, please discuss them with LivingCenter
staff before you sign the Agreement. You are encouraged to have
this Agreement reviewed by your attorney, or by any other
advisor of your choice before you sign it.
If you are able to do so, you must sign this Agreement in order to
be admitted to this LivingCenter. If you are not able to sign this
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Agreement, your Legal Representative, who has been given
authority by you to admit you to the LivingCenter, must sign it
on your behalf. This Agreement will become effective on the day
you are admitted to the LivingCenter regardless of the date you
and/or your Legal Representative signs it. You are not required
to sign any other document as a condition of admission to the
LivingCenter.
Appellant’s App. p. 29.
[4] Cavazos also signed an alternative dispute resolution agreement1 (“arbitration
agreement”) at the same time that provides in relevant part:
THIS AGREEMENT IS NOT A CONDITION OF
ADMISSION TO OR CONTINUED RESIDENCE IN THE
FACILTY.
II. Voluntary Agreement to Participate in ADR
The parties agree that any disputes covered by this Agreement
(“Covered Disputes”) that may arise between them shall be
resolved exclusively by an ADR process that shall include
mediation and, where mediation is not successful, binding
arbitration. The parties to this Agreement acknowledge and agree
that upon execution by Resident, this Agreement becomes part of
the Admission Agreement, and that the Admission Agreement
evidences a transaction in interstate commerce governed by the
Federal Arbitration Act. The relief available to the Parties under
this Agreement shall not exceed that which otherwise would be
1
Maynard also signed the admission agreement as Cavazos’s personal representative. It is unclear why
Maynard did not also sign the arbitration agreement at issue. Although, the record does not reflect that
Cavazos was unable to sign either agreement on his own behalf.
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available to them in a court action based on the same facts and
legal theories under the applicable federal, state or local law.
THE PARTIES UNDERSTAND, ACKNOWLEDGE, AND
AGREE THAT THEY ARE SELECTING A METHOD OF
RESOLVING DISPUTES WITHOUT RESORTING TO
LAWSUITS OR THE COURTS, AND THAT BY
ENTERING INTO THIS AGREEMENT, THEY ARE
GIVING UP THEIR CONSTITUTIONAL RIGHT TO HAVE
THEIR DISPUTES DECIDED IN A COURT OF LAW BY A
JUDGE OR JURY, THE OPPORTUNITY TO PRESENT
THEIR CLAIMS AS A CLASS ACTION AND/OR TO
APPEAL ANY DECISION OR AWARD OF DAMAGES
RESULTING FROM THE ADR PROCESS EXCEPT AS
PROVIDED HEREIN.
***
VIII. Proof of Agreement
The Parties agree and stipulate that the original of this
Agreement, including the signature page, may be scanned and
stored in a computer database or similar device, and that any
printout or other output readable by sight, the reproduction of
which is shown accurately to to reproduce the original of this
document, may be used for any purpose just as if it were the
original, including proof of the content of the original writing.
This agreement shall be binding upon the Facility when signed
by or on behalf of the Resident, regardless of whether this
Agreement has been signed by a Facility representative.
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IX. Resident’s Understanding
The Resident understands that he or she has the right to seek
advice of legal counsel concerning this Agreement; that his or her
signing of this Agreement is not a condition of admission to or
residence in the Facility; that he or she may revoke this
Agreement by sending written notice to the Facility within thirty
(30) days of signing it; and that this Agreement, if not revoked
within that time frame, shall remain in effect for all care and
services rendered to the Resident at or by the Facility regardless
of whether the Resident is subsequently discharged and
readmitted to the Facility without renewing, ratifying, or
acknowledging this Agreement.
Appellant’s App. pp. 36, 38. Cavazos was given the original signed agreements,
and Golden Living retained a copy of the signature pages for the admission
agreement and the arbitration agreement. Cavazos later died on May 17, 2013.
[5] On February 17, 2014, Maynard filed a complaint against Golden Living and
others, alleging that on or around July 18, 2011, Cavazos was a resident of
Golden Living and that it was responsible for his care. In her complaint,
Maynard asserted that Golden Living’s skilled agents, employees, and
representatives, while acting in their scope and agency with Golden Living,
failed to comply with the applicable standards of care. She further stated that
Golden Living breached its contractual duty to provide Cavazos with adequate
medical, nursing, and custodial care along with a safe and sanitary living
condition in a dignified and respectful manner. Maynard argued that this
negligence and breach of contract caused Cavazos to suffer permanent injuries
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and disabilities, great pain, emotional distress, mental trauma, and ultimately
death.
[6] Golden Living filed a motion to dismiss, demand for arbitration, and motion to
compel arbitration (“motion to compel arbitration”) on November 21, 2014,
alleging that parties to this matter agreed to resolve any claims by binding
arbitration pursuant to the arbitration agreement. To support its motion,
Golden Living relied on a blank arbitration agreement with accompanying
signature page. On February 12, 2015, Maynard filed her response to Golden
Living’s motion to compel arbitration, alleging that Golden Living failed to
meet its burden that an enforceable arbitration agreement existed. The trial
court held a hearing on the motion to compel arbitration on June 9, 2015. At
the end of the hearing, the court determined that it would not rule on the matter
until Golden Living had an opportunity to depose its former Marketing
Director, Joni Lott (“Lott”).
[7] On August 5, 2015, Golden Living deposed Lott. At the deposition, Lott
explained that she helped Cavazos with his admission into Golden Living. Lott
presented Cavazos with the admission agreement and arbitration agreement,
which he signed. Maynard also signed the admission agreement in Lott’s
presence, but Lott could not recall why Maynard did not sign the arbitration
agreement. Before Cavazos signed the arbitration agreement, Lott told him that
he could take it home if he wanted to review the agreement further. Lott noted
that at the time Cavazos signed the agreement, he was alert and oriented, able
to speak to her and answer questions, and appeared to understand what she was
Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016 Page 6 of 14
saying.2 Appellant’s App. p. 112. After the agreements were executed, Lott gave
Cavazos the original documents and kept the signature pages to give to the
office based on routine procedure.
[8] Golden Living subsequently filed its supplemental brief in support of its motion
to compel arbitration on September 8, 2015. Maynard responded the next day
with her supplemental response in opposition to Golden Living’s motion to
compel arbitration. On October 26, 2015, the trial court granted Golden
Living’s motion to compel arbitration. In its order the court concluded:
[A]s incredulous as it was for Golden [Living] to not retain a
copy of it’s[sic] own admission and alternative dispute resolution
agreement, there is sufficient evidence secondary evidence in
addition to the signature page for the court to find that there was
an enforceable arbitration agreement.
Appellant’s App. p. 19.
[9] Maynard filed a motion for certification of appeal of interlocutory order on
November 5, 2015. The trial court granted the motion seven days later. On
December 7, 2015, Maynard filed a motion asking this court to accept
interlocutory jurisdiction, and our court granted the motion on January 19,
2016. This appeal now ensues.
2
Maynard fails to raise lack of capacity to contract as a defense in her brief. As a result, we conclude that
Cavazos’s competence was not contested here. See infra pp. 12-13.
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Standard of Review
[10] Maynard argues that the trial court erred in granting Golden Living’s motion to
compel arbitration. Written agreements to submit to arbitration are valid and
enforceable, except where grounds exist for revocation of any contract. Ind.
Code § 34-57-2-1(a). Arbitration is initiated by written notice by either party.
Ind. Code § 34-57-2-2. If a party seeks arbitration, and the other party refuses to
arbitrate, the party seeking arbitration may move a trial court to compel
arbitration, and, where arbitration is ordered, the underlying action at the trial
court must be stayed. Ind. Code § 34-57-2-3(a), (d).
[11] Our review of a trial court’s order compelling arbitration is de novo. Brumley v.
Commonwealth Bus. College Educ. Corp., 945 N.E.2d 770, 775 (Ind. Ct. App.
2011). Both Indiana and federal law recognize a strong public policy favoring
enforcement of arbitration agreements. Safety Nat. Cas. Co. v. Cinergy Corp., 829
N.E.2d 986, 1000 (Ind. Ct. App. 2005), trans. denied. A party seeking to compel
arbitration must satisfy two elements. Id. First, the party must demonstrate that
there is an enforceable agreement to arbitrate the dispute. Id. Second, the party
must prove the disputed matter is the type of claim that the parties agreed to
arbitrate.3 Id.
Discussion and Decision
3
Maynard only contends that the arbitration agreement is unenforceable, so we will only address the
argument presented before us on appeal.
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A. Whether the Agreement is Enforceable
[12] Maynard specifically contends that the arbitration agreement is ambiguous and
therefore unenforceable because the blank agreement submitted by Golden
Living in its motion to compel arbitration does not identify the parties to the
agreement.
[13] The goal of contract interpretation is to determine the intent of the parties when
they made the agreement. Citimortgage, Inc. v. Barabas, 975 N.E. 805, 813 (Ind.
2012), reh’g denied. “We begin with the plain language of the contract, reading it
in context, and, whenever possible, construing it so as to render each word,
phrase, and term meaningful, unambiguous, and harmonious with the whole.”
Id. “[C]onstruction of the terms of a written contract is a pure question of law
for the court, reviewed de novo.” Harrison v. Thomas, 761 N.E.2d 816, 818 (Ind.
2002).
[14] “A contract is ambiguous if a reasonable person would find the contract subject
to more than one interpretation.” Barabas, 975 N.E.2d at 813. If the language is
unambiguous, we may not look to extrinsic evidence to expand, vary, or
explain the instrument but must determine the parties’ intent from the four
corners of the instrument. Bd. of Commr’s of Delaware Cnty. v. Evans, 979 N.E.2d
1042, 1046 (Ind. Ct. App. 2012). However, if the language is ambiguous, we
will construe the terms to determine and give effect to the intent of the parties
when they entered into the contract. Barabas, 975 N.E.2d at 813.
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[15] Courts may properly consider all relevant evidence to resolve the ambiguity.
Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 535 (Ind. 2006). “Extrinsic
evidence is relating to a contract but not appearing on the face of the contract
because it comes from other sources, such as statements between the parties or
the circumstances surrounding the agreement. CWE Concrete Const., Inc. v. First
Nat’l Bank, 814 N.E.2d 720, 724 (Ind. Ct. App. 2004), trans. denied. If a contract
is ambiguous, it should be construed against the party who furnished and
drafted the agreement. Keithley’s Auction Serv. v. Children of Jesse Wright, 579
N.E.2d 657, 659 (Ind. Ct. App. 1991).
[16] Because Maynard asserts that the parties to the agreement were not identified
and as such made the arbitration agreement ambiguous, we consider the
extrinsic evidence to resolve the ambiguity. Neither Golden Living nor
Maynard produced the original admission agreement or arbitration agreement
during the course of these proceedings. Under Indiana Rule of Evidence 1004
(a), an original is not required and other evidence of the content of a writing,
recording, or photograph is admissible if all originals are lost or destroyed, and
not by the proponent acting in bad faith.
[17] Here, Golden Living submitted a blank copy of the admission agreement and
the arbitration agreement along with the signature pages from both agreements.
Appellant’s App. pp. 26-34; 36-42. Lott testified that Cavazos executed both
agreements, while Maynard only signed the admission agreement. Appellant’s
App. pp. 35, 50. Lott explained that after a resident signed the documents, she
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would make a copy of the signature pages for Golden Living and give the
original copy to the resident.
[18] Although the portion of the arbitration agreement identifying the parties was
blank, the agreement was a standard form used by Golden Living in each new
resident admission. At the bottom of the agreement on each page, the
document was labeled, “Golden Living Centers: Alternative Dispute
Resolution Agreement (rev. 01/10).” See Appellant’s App. pp. 43, 47. The
signature forms submitted by Golden Living contain the same language and
match the terms and conditions outlined in the blank arbitration agreement.
Further, even though Cavazos and Golden Living were not listed as the
“Resident” and “Facility” lines of the agreement, Lott’s deposition testimony
and Maynard’s complaint establish that Cavazos and Maynard were entering
into a contract with Golden Living, which agreed to provide certain services to
Cavazos. It is not contested that Cavazos was a resident of the Golden Living
facility.
[19] Golden Living inexplicably failed to retain a copy of the arbitration agreement,
but the trial court concluded that sufficient extrinsic evidence existed to
conclude that an enforceable agreement exists. We agree and conclude that the
extrinsic evidence in the record resolves the ambiguity surrounding the parties
to the arbitration agreement. See Tender Loving Care Mgmt., Inc. v. Sherls, 14
N.E.3d 67, 73 (Ind. Ct. App. 2014). We therefore conclude that the trial court
did not err in granting Golden Living’s motion to compel arbitration after
determining that the arbitration agreement was enforceable.
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B. Whether the Arbitration Agreement is Voidable
[20] Further, Maynard asserts that even if the arbitration agreement is enforceable, a
defense to the contract exists because Cavazos was fraudulently induced to
execute the agreement by Lott. Fraudulent inducement occurs when a party is
induced through fraudulent misrepresentations to enter a contract. Brumley, 945
N.E.2d at 776. If a party’s manifestation of assent is induced either by a
fraudulent or a material misrepresentation by the other party upon which the
recipient is justified in relying, the contract is voidable by the recipient. Id.
Fraudulent inducement does not prevent the formation of a contract altogether,
but it does render the contract “voidable.” Id.
[21] The elements of fraud are: (1) a material representation of past or existing facts
which (2) was false, (3) was made with knowledge or reckless ignorance of its
falsity, (4) was made with the intent to deceive, (5) was rightfully relied upon by
the complaining party, and (6) proximately caused the injury to the
complaining party. Tru-Cal v. Conrad Kacsik Instrument Sys., Inc., 905 N.E.2d 40,
44-45 (Ind. Ct. App. 2009).
[22] Here, Maynard does not argue that Lott made a false material representation of
fact with an intent to deceive Cavazos. Rather, she argues that Lott is not an
attorney and does not understand the legal ramifications of signing an
alternative dispute resolution agreement. However, the record reflects that Lott
encouraged Cavazos to take the agreement with him to review and the
arbitration agreement conspicuously stated that signing the document was not a
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condition of admission and could be revoked within thirty days. Even if Lott
misunderstood the legal ramifications of executing an arbitration agreement, as
Maynard argues, the requisite intent required to establish fraud does not exist
here. Therefore, we cannot conclude that fraudulent inducement is a valid
defense to deem the arbitration agreement voidable.
[23] We acknowledge that buried in her fraudulent inducement argument, Maynard
notes that Lott testified that it was possible Cavazos did not understand what he
was signing. When determining if a person has the mental capacity to enter into
a contact, the test is whether the person was able to understand in a reasonable
manner the nature and effect of his act on the date of the agreement. Wilcox
Mfg. Group, Inc. v. Marketing Servs. Of Indiana, Inc., 832 N.E.2d 559, 563 (Ind. Ct.
App. 2005). Because lack of capacity to contract is Maynard’s defense to the
arbitration agreement, it is her burden to present evidence that Cavazos was
incompetent to contract. However, Maynard fails to raise lack of capacity to
contract as a defense and presents no evidence that Cavazos was incompetent
on July 18, 2011. Therefore, Cavazos’s competence was not contested here.
[24] Furthermore, while Maynard is designated as the personal representative of
Cavazos’s estate, the record does not reflect that she was Cavazos’s guardian at
the time the admission agreement was signed. It is reasonable to believe that
Golden Living’s and Maynard’s common purpose in Maynard’s execution of
the admission agreement was to guarantee payment for Cavazos’s nursing care
if his estate became insolvent. As such, Maynard’s right to bring suit is
derivative of Cavazos’s. As previously mentioned, Cavazos signed both the
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admission agreement and arbitration agreement, so as personal representative
of his estate, Maynard is bound by the arbitration agreement. It was Maynard’s
burden to present evidence that Cavazos was incompetent to contract and/or
that she was his legal representative at the time the contracts were signed.
Because of this failure, we conclude that in her derivative claim against Golden
Living, she is bound by the agreements Cavazos signed as a presumed
competent individual.
[25] For all of these reasons, we conclude that because the arbitration agreement is
enforceable, Maynard has failed to establish a defense that renders the
agreement voidable, and since Maynard was not Cavazos’s legal personal
representative at the time the admission and arbitration agreements were
signed, the trial court did not err in granting Golden Living’s motion to compel
arbitration.
[26] Affirmed.
Vaidik, C.J., and Barnes, J., concur.
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