RENDERED: MAY 19, 2023; 10:00 A.M.

TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2022-CA-0993-MR

PADUCAH CENTER FOR HEALTH 

AND REHABILITATION, LLC D/B/A 

STONECREEK HEALTH AND 

REHABILITATION; CLEARVIEW 

HEALTHCARE MANAGEMENT KY, 

LLC D/B/A CLEARVIEW 

HEALTHCARE MANAGEMENT; 

PADUCAH CONSULTING, LLC; 

PADUCAH PROPCO; AND SARAH 

STEWART, IN HER CAPACITY AS 

ADMINISTRATOR OF 

STONECREEK HEALTH AND 

REHABILITATION APPELLANTS 

v. 

APPEAL FROM MCCRACKEN CIRCUIT COURT

HONORABLE TIMOTHY KALTENBACH, JUDGE

ACTION NO. 22-CI-00042

TERRY LANCE PENIX, AS 

EXECUTOR OF THE ESTATE OF 

TERRY LYNN PENIX, DECEASED 

AND TERESA PENIX, 

INDIVIDUALLY APPELLEES 
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OPINION

AFFIRMING

**   **  **

BEFORE: CETRULO, JONES, AND TAYLOR, JUDGES.

CETRULO, JUDGE: This is an appeal from a ruling of the McCracken Circuit 

Court, which denied a motion to compel arbitration filed by the Paducah Center for 

Health and Rehabilitation, LLC d/b/a Stonecreek Health and Rehabilitation

(“Stonecreek”); Paducah Consulting, LLC; Clearview Healthcare Management 

KY, LLC d/b/a Clearview Healthcare Management; Paducah Propco; and Sarah 

Stewart, in her capacity as Administrator of Stonecreek Health and Rehabilitation. 

The underlying action was one for wrongful death, negligence, loss of consortium,

and punitive damages filed against Stonecreek, a nursing home, and its corporate 

entities and administrator. Terry Lynn Penix (“Terry”) had been a resident of 

Stonecreek for approximately one year prior to his death in March 2021. The suit 

was filed through his executor, Terry Lance Penix, and his wife, Teresa Penix

(“Teresa”). Stonecreek filed a motion to dismiss. The trial court did not dismiss 

the complaint nor compel arbitration, finding that Stonecreek did not meet its 

burden of establishing a valid agreement to arbitrate. For the reasons set forth 

below, we affirm.
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FACTS

In 2014, Terry executed a Living Will Directive and Advance 

Directive (“POA”) naming Teresa as his health care power of attorney. In 2020, 

Terry was admitted as a resident to Stonecreek. The record does not contain any 

information as to his physical or mental status at that point, but as part of the 

admission process, Teresa executed an Admissions Agreement (“the Agreement”). 

She did so by signing her name at the end of the document, above a line which 

read “Resident – Individual or by Legal Representative.” This was in response to a 

provision acknowledging that the Agreement had been read and understood.

A second provision at the end of the Agreement required a 

“sponsor’s” name and signature acknowledging that the person “agreed to the 

personal undertakings of the sponsor, as provided for in the Agreement[.]” Teresa

wrote her name below that acknowledgement, not on a signature line, but next to a 

line that read “Sponsor.” Below that, she entered the word “wife” next to a line 

that read “Relation.” However, on the first page of the document, she had written

“Terry L. Penix,” as sponsor.1 In another section of the Agreement, “sponsor” was

defined as “a person legally responsible for the [r]esident or must be in the process 

1

It is not clear whether Teresa intended “Terry L. Penix” to refer to “Terry Lance Penix,” the

executor listed in the complaint filed a year later, or to her husband “Terry Lynn Penix.”
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of obtaining such status, including a guardian, a person holding a durable power of 

attorney and/or a conservator.”

Elsewhere in the 12-page agreement, there was a section entitled 

“Disputes.” That section read, in part, that:

(i) To the fullest extent allowed by law, Resident and/or 

the Resident’s legally authorized representative who signs 

this Agreement, on behalf of the Resident, the Resident’s 

heirs, assigns, and all others acting or purporting to act for 

the Resident or the Resident’s estate, and Facility agree 

that all civil claims arising in any way out of this 

Agreement or the nursing care that Facility, its 

employees, or agents provide to Resident, other than 

claims by the Facility to collect unpaid bills for services 

rendered, or to involuntarily discharge the Resident, shall 

be resolved exclusively through mandatory mediation, 

and, if such mediation does not resolve the dispute, 

through binding arbitration using the commercial 

mediation and arbitration rules and procedures of 

JAMS/Endispute. . . . (ii) Resident and Facility also agree 

that, to the greatest extent allowed by law, both 

Resident and Facility shall seek only actual damages in 

any such mediation or arbitration, and that neither of 

them will pursue any claim for punitive damages, 

treble damages or any other type of damages the 

purpose of which are to punish one party in an amount 

greater than the actual damages allegedly caused by 

the other party[.]

A little over a year later in March 2021, Terry left the nursing home. 

He died a few weeks later. On January 23, 2022, Terry’s estate filed a complaint 

alleging negligence, wrongful death, and spousal consortium claims against 
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Stonecreek.

2 Stonecreek answered and then filed the motion to dismiss and 

compel arbitration, based upon the “Disputes” provision, the signatures referenced 

above, and the power of attorney for health care. In response, the estate argued 

that Teresa had signed the Agreement in her capacity as wife to Terry, that she 

lacked the authority to bind him or the estate to the arbitration provision of the 

Agreement, and that enforcement of the same would deprive the estate of its 

constitutionally protected right to a trial by jury. The trial court denied the motion 

to compel arbitration, resulting in this appeal.

LEGAL ANALYSIS

Arbitration agreements are contracts; therefore, to determine if an 

arbitration agreement is enforceable, a court must look to principles governing 

contract law. Ping v. Beverly Enters., Inc., 376 S.W.3d 581, 591 (Ky. 2012); see 

also General Steel Corp. v. Collins, 196 S.W.3d 18, 20 (Ky. App. 2006). The 

enforcement and effect of an arbitration agreement is governed by the Kentucky 

Uniform Arbitration Act (“KUAA”), Kentucky Revised Statutes (“KRS”)

2 The parties agree that the wrongful death claim asserted in the complaint was not subject to 

arbitration, regardless, because it belongs to the beneficiaries under Kentucky’s wrongful death 

statute, Kentucky Revised Statute 411.130. An agreement to arbitrate claims against a skilled 

nursing facility operator did not bind wrongful death beneficiaries to arbitrate her wrongful death 

claim against operators. Diversicare of Nicholasville, LLC v. Lowry, 213 F. Supp. 3d 859, 

869-70 (E.D. Ky. 2016). See also Kindred Nursing Centers Ltd. Partnership v. Cox, 486 S.W.3d 

892, 893 (Ky. App. 2015) (“Under Kentucky precedent, wrongful death claims are not subject to 

arbitration.”).
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417.045-417.240, and the Federal Arbitration Act (“FAA”), 9 U.S.C.3 §§ 1-402.

“Both Acts evince a legislative policy favoring arbitration agreements, or at least 

shielding them from disfavor.” Ping, 376 S.W.3d at 588.

Further, the Kentucky Supreme Court explained that under both Acts, 

the party “seeking to compel arbitration has the initial burden of establishing the 

existence of a valid agreement to arbitrate.” Id. at 590 (citations omitted). Then, 

“[u]nless the parties clearly and unmistakably manifest a contrary intent, that initial 

showing is addressed to the [trial] court . . . and the existence of the agreement 

depends on state law rules of contract formation.” Id. (citations omitted). This 

Court reviews the trial court’s application of those rules de novo. However, we 

review any factual findings for clear error. Id. (citation omitted).

Importantly, nothing in the FAA modifies the basic principles of state 

contract law regarding the scope of agreements and who is bound by them. Golden 

Gate Nat’l Senior Care, LLC v. Rucker, 588 S.W.3d 868, 870 (Ky. App. 2019).

(citation omitted). Therefore, “[o]rdinary contract principles govern the validity of 

an arbitration agreement.” GGNSC Stanford, LLC v. Rowe, 388 S.W.3d 117, 121 

(Ky. App. 2012). Moreover, arbitration agreements “constitute a waiver of the 

right to a trial by jury, which is a fundamental right.” Jackson v. Legacy Health

3 United States Code. 
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Servs., Inc., 640 S.W.3d 728, 735 (Ky. 2022) (citations omitted); see also KY.

CONST. § 7.

As discussed, we must first determine whether the party seeking to 

compel arbitration – here, Stonecreek – met its burden of establishing the existence 

of a valid agreement to arbitrate. Ping, 376 S.W.3d at 590. In Kentucky, to form a 

valid and enforceable agreement, “there must be voluntary and complete assent by 

parties having the capacity to contract.” Cambridge Place Group, LLC v. Mundy, 

617 S.W.3d 838, 840 (Ky. App. 2021) (citation omitted). The trial court found that 

Stonecreek failed to meet its burden.

While the trial court noted that Terry had named Teresa as his health 

care surrogate in 2014, it framed the issue as determining whether she signed the

Agreement in that capacity. The trial court found that she had not done so,

relying in large part on an unpublished opinion of this Court, Providence 

Healthcare of Pine Meadows, LLC v. Roark, No. 2020-CA-0117-MR, 2020 WL 

7086083 (Ky. App. Dec. 4, 2020). We agree that Roark is quite analogous and 

thus bears further discussion.

In Roark, a nursing home resident had executed a power of attorney 

naming his son as his health care attorney-in-fact. Roark, 2020 WL 7086083, at 

*1. During Roark’s admission to the facility, his son had executed a document 

similar to the Agreement herein, which included an arbitration agreement. Id. 
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However, as here, the son had signed the documents with his name only and did 

not indicate his status as attorney-in-fact. Id. This Court upheld the trial court’s 

ruling that the nursing facility had failed to meet its burden of establishing the 

existence of a valid arbitration agreement. Id. at *3.

Here, Stonecreek initially asserts that this Court should not rely upon 

an unpublished opinion, and secondly, that the Roark decision is distinguishable 

from this case. As Stonecreek points out, Teresa did fill in her name or initial this 

document in a few other places next to the line, “Sponsor Name.” Additionally, 

Stonecreek’s contract did define the term “sponsor” earlier in the document as “a 

person legally responsible for the [r]esident or [sic] must be in the process of 

obtaining such status, including a guardian, a person holding a durable power of 

attorney and/or a conservator.”

However, as the trial court noted, Teresa did not sign at any time as 

attorney-in-fact or power of attorney. Moreover, on the first page of the document, 

she wrote “Terry L. Penix” as sponsor, rather than her own name. Therefore, she 

argues she did not sign the Agreement in her capacity as a health care attorney-infact or as sponsor, but as his wife. Like the trial court, we find the Roark opinion 

to be indistinguishable from this case. Moreover, we also rely upon several 

published opinions that address such arbitration clauses in nursing home scenarios.
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In Ping, our Supreme Court clarified that legal representatives may

execute arbitration agreements on behalf of a facility’s resident. Ping, 376 S.W.3d

at 593. However, an attorney-in-fact does not have the authority to bind principals 

to pre-dispute arbitration agreements unless such authority is clearly stated in the 

durable power of attorney. Genesis Healthcare, LLC v. Stevens, 544 S.W.3d 645, 

651 (Ky. App. 2017).

In Genesis, this Court followed our Supreme Court’s directive in 

Ping, noting that:

an agent’s authority under a power of attorney is to be 

construed with reference to the types of transaction 

expressly authorized in the document and subject always 

to the agent’s duty to act with the utmost good faith. Ping, 

376 S.W.3d at 592, citing Wabner v. Black, 7 S.W.3d 379, 

381 (1999), and Restatement (Second) of Agency, § 37 

(1958). Consequently, general expressions of authority 

must be construed in furtherance of the specific powers 

granted by the POA. Id. at 592-93.

Id.

Here, the POA designated Teresa as the Agent and provided the 

“powers conferred upon a health care Agent by KRS 311.629,”4 which it explained 

applied “only as to those health care decisions for which [Terry is] unable to give 

informed consent.” The POA went on to detail specific preferences concerning

such “health care decisions,” including mechanical ventilation, dialysis, antibiotics, 

4 KRS 311.629 details the powers of health care surrogates, which specifically notes powers 

including making health care, treatment, and nutrition decisions.
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and artificial nutrition and hydration. Additionally, the POA provided the Agent –

i.e., Teresa – with authority to “[t]ake any lawful actions that may be necessary to

carry out these decisions, including, but not limited to: (i) signing, executing, 

delivering, and acknowledging any agreement, release, authorization, or other 

document that may be necessary, desirable, convenient, or proper in order to 

exercise and carry out any of these powers . . . .” Thus, here, we must determine 

whether the POA provided authority for Teresa to enter an arbitration agreement, 

thereby waiving Terry’s right to a jury trial.

In Rowe, we held that even though parents of an incompetent person

had the right to make health care decisions under KRS 311.621 – Kentucky’s 

Living Will Directive Act – entering into an arbitration agreement was not a health 

care decision as defined by the statute. Rowe, 388 S.W.3d at 124. Specifically, the 

statute provides that “‘Health care decision’ means consenting to, or withdrawing 

consent for, any medical procedure, treatment, or intervention.” Id. (citing 

KRS 311.621(8)). There, we noted, the arbitration agreement did not concern “any 

type of medical treatment, procedure, or intervention[,]” and like here, addressed

“only means of dispute resolution[.]” Id. Importantly, we explained that the 

arbitration agreement was not a necessary part of the agreement to admit the 

resident, but instead was “separate and ancillary.” Id.
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Here, we have found nothing within the body of the Agreement that 

states it was mandatory for admission. While that was briefly suggested by 

Stonecreek’s counsel at the hearing on the motion, it was not addressed by the trial 

court in its opinion, nor did the parties discuss this in their briefs.

Similarly, in Rucker, this Court noted that a provision in the power of 

attorney enabling the agent to “institute, maintain, defend, settle and dismiss legal 

proceedings . . . did not expressly authorize [the agent] to enter into an arbitration 

agreement, which would have the effect of waiving [the resident-principal’s] right 

to a jury trial.” Rucker, 588 S.W.3d at 871 (emphasis added). Again, citing to

Ping, we held that “[a]bsent authorization in the [power of attorney] to settle 

claims and disputes or some such express authorization addressing dispute 

resolution, authority to make such a waiver is not to be inferred lightly.” Id.

(quoting Ping, 376 S.W.3d at 593). There, the trial court had acknowledged, like 

here, the power of attorney did not suggest that the principal’s intent was to 

authorize the agent to make such waivers on the principal’s behalf; “therefore, no 

actual or apparent authority existed to sign the arbitration agreement.” Id.

 Furthermore, in Mundy, 617 S.W.3d at 841, this Court addressed a 

strikingly similar case involving a wife who signed an admissions agreement for 

her husband to enter a nursing home and listed her relation as “wife” rather than

power of attorney. We held that the arbitration agreement signed by the resident’s 
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spouse was invalid, in part, because she specifically wrote “wife” above a line 

entitled “Legal Representative Capacity (i.e., guardian, spouse, child, Attorney-in

Fact, etc.)” stating:

While Cambridge is correct that Kentucky law does not 

require a party to explicitly state they are acting as an 

attorney-in-fact, the issue herein is not [the agent’s] 

silence but rather her affirmative avowal that she was 

acting in a separate capacity. In her capacity as wife, [the 

agent] was authorized to make limited decisions on behalf 

of [the principal]; however, the pre-dispute arbitration

agreement was outside that scope. 

Id. (citing Rowe, 388 S.W.3d at 124) (emphasis added). Accordingly,

we found the trial court had not erred when it found there was not a valid 

arbitration agreement. Id.

Similarly, here, Teresa not only failed to designate herself as the

power of attorney, but she also specifically indicated that she was acting as Terry’s

wife. As in Mundy, the trial court here found such indication suggested Teresa was

signing the agreement in her “wife” capacity, not as power of attorney. As in

Mundy, the trial court did not err in finding there was not a valid arbitration

agreement.

 Indeed, our review of the plethora of cases arising out of nursing home 

arbitration agreements reveals that the vast majority have ruled that such 

agreements are not enforceable for a host of reasons. We are mindful of the recent 

decision in LP Louisville East, LLC v. Patton, 651 S.W.3d 759, 770 (Ky. 2020), as
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modified on denial of reh’g (Apr. 29, 2021), which did enforce an arbitration 

agreement executed by a son admitting his father into a nursing facility. However, 

that agreement, entitled “Agreement to Informally Resolve and Arbitrate All 

Disputes,” stated that it required “all new residents and/or their legal 

representatives to read, agree, and sign” the agreement as a condition of admission 

to the facility. Id. at 762. We find no such requirement here.

Further, there, the power of attorney that the son provided to the 

facility specifically authorized him to “submit to arbitration, settle, and propose or 

accept a compromise with respect to a claim or litigation[.]” Id. at 763. Again, 

here, there is no such authorization in the POA.

 Finally, subsequent to Patton, our Supreme Court held that a nursing 

home resident’s fundamental right to trial by jury was denied by her son’s 

signature as guardian on a voluntary arbitration agreement. In Jackson, our 

Supreme Court reversed a panel of this Court in a matter of first impression, 

specifically stating that the fundamental right to a jury trial was limited beyond the 

extent necessary to provide needed care and services, because the arbitration 

agreement in that case was not a condition of the patient receiving care or being 

admitted to the facility. Jackson, 640 S.W.3d at 735. The Supreme Court found 

that because release of that right was not necessary for services, the guardian
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lacked the authority to enter into the arbitration agreement, so it was not binding,

and void. Id.

Here, similarly, the Agreement does not state that the arbitration

agreement was required as a condition for admission to Stonecreek. The POA did 

not specifically authorize Teresa to agree to arbitration. Teresa had only signed the 

Agreement in her capacity as wife, under KRS 311.621, not as power of attorney. 

Finally, the Agreement, while signed or initialed by Teresa in a few locations next 

to the line “Sponsor,” also specifically listed “Terry L. Penix” as sponsor on the 

first page. Based upon general contract principles and upon ample authorities

upholding a resident’s fundamental right to a jury trial, unless clearly released by a 

power of attorney granting full authority to do so, the trial court properly applied

the law in finding that Stonecreek did not meet its burden of establishing a valid,

enforceable agreement. Accordingly, we affirm the denial of the motion to compel 

arbitration.

ALL CONCUR.
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BRIEFS FOR APPELLANTS:

A. Pete Pullen

Leah T. Scharff

Louisville, Kentucky 

BRIEF FOR APPELLEES:

Brian M. Jasper

Louisville, Kentucky