### IN THE COURT OF APP EALS OF TENNESS EE A T ME MP H IS Ja nuary 23, 200 8 S es sio n MATTH EW T HORNTO N, ET AL 

### . v. ALLE NBROOK E NURSING AND

REHABI LI TATI ON CENTER, LL C, ET AL 

### . Direc t Appeal from the Circ uit Court for Sh elby County No. CT-006784-05 Jam es Russell, Jud ge

No. W2007-00950-C OA-R3-C V - F iled Jul y 3, 2008

Th is a pp e a l invo lve s a

dis pute ov e r an arb itr a tio n a g re e me nt, and ste ms f ro m a nurs ingho me abuse a nd neg lect ca se. The de cede nt’s daug hter sig ned all t h e p ap erwork associated with the dece dent’s admissi on to the nursing home. An ar bitration ag ree ment was include d in the admissions ag ree ment. Dec edent’ s daug hter, as next of ki n, filed a complaint alleg ing nur sing home abuse a nd neg lect. The nursing home moved to stay the case and compel the matter to arbitration. The trial c ourt he ld that dau g hte r did no t hav e a uth or ity to wa ive de c e de nt’ s c on sti tut ion a l r ig ht t o a jur y tr ia l, and den ie d

th e nur s in g h o me ’ s mo ti o n . T h e nur s in g h o me a p p e a ls

. We a f

f ir m t h e tr ia l c o u rt’ s decision. Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Circ uit Aff irm ed; and Rem anded
D AVI D R. F ARMER , J ., delivere d the opinion of the cour t, in which Alan E. Highe rs , P

. J

. , W.S ., jo in e d

. W. F RAN K C RAW FORD , J

. , n o tp art i ci p at i n g. Rebec ca A delman and Cha se Pittm an, Memphis, Tenne ssee, for t he appe llant, Allenbrooke Nursing and R ehabilitation Center, L L C, Allenbrooke Hea lth Care Center , Allenbrooke Hea lth Care Center d/b/a Be verly

Enterpr ises, Tenne ssee, Inc. And B ever ly Enterpr ises Tenne ssee, Inc. Peter B. Gee , J r., Memphis, T ennesse e and Br ian G. Br ooks, Gre enbrie r, Arka nsas, for the appellee , Matthew Thor

nton, Probate Estate A dminist rator. OP IN ION
Fac ts a nd P

ro c e dural H

ist or y In Dec ember

of 2004, Ira L ee Jones (herei n afte r, the “ Dec edent” ) wa s admitted into the Allenbrooke Nursingand Reha bilitation Center (here inafter , “Nur sing Home”. On Dece mber 15, 20 04 , h e r d a

ug hte r, Patr ic ia

Ray bo n, (h e re ina ft e r, the “ Da ug hte r” ), me t w ithChr istophe r We lls (her einaf ter, “ Mr. Wells”), the admissions and sales r epre sentative at Nursing Home. D uringtheT he nam e “ Ir a Jo nes” had b een hand wri t t en o n the t wo blank l i nes desi gnat ed f o r t he Fa ci l i t y and t he R esi d ent 1
-2- meeting , Daug hter sig ned seve ral doc uments for he r mother’ s admission, including an A dmission Ag ree ment and an Arbitration Ag ree ment. Th e Ar bit ratio n A g re e me nt b e g ins on pa g e 29 of

the 34 pa g e Ad

mis sio n A g re e me nt, and

is de signate d a s EX HI B I T B , wi th the fo llo wi ng tit le c e nte re d und e rn e ath t he he a din g : RESIDENT AN D F AC ILI TYARBITR AT ION AG RE EM EN T (e mp h as i s i no ri gi n al ). T h e t w o (2 ) p age do c ume nt p ro vid e s:

This ARBI TRATI ON AGREEMEN T (“A g ree ment”) is ex ecuted by

___ _ _ _ _ _ _ _ _ _ _ _ _ _ ( th e “ F a c il it

y ” ) an d

_

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ( “ Re s id e n t” ) or 1 “Residen t ’s Desig nated Repr esentative”, her eaf ter c ollectively

ref err ed to as (“Reside nt”) in conjunc tion with the ag ree ment for a dmission and for the provision of nursingfac i l ity

service s (the “A dmission Agre ement”) by the Fa cility

to the Resident. The pa

rties to this Agr eeme nt acknowle dg e and a g ree that upon execution, this Agr eeme nt becomes pa rt of the Admission Ag ree ment, and that the Admission Ag ree ment evidenc es a transac tion in interstate commerce g overne d by the Fe dera l Arbitration Ac t. I t is understood and ag ree d by the Fa cility and the Resident that a

ny a nd a l l c l a i m s , d i s p u t e s , an d c o n tr o v e r s i e s ( h e r e a f t e r c o l l e c t i v e l y r e f

e r r e d to a s a “cla im” or collec tively

as “c laims”) arising out of , or in conne ction with, or relating in any way to the Admission Agr eeme nt or any service or hea lth care provided by the Fa cility to the Resident shall be re solved exclusively by binding a

rbitration to be conducte d a t a p la c e a g r e e d u p o n b y th e Pa

rti e s , o r in th e a

b s e n c e o f s u ch an ag ree ment, at the F acility , in a ccor dance with the National Ar bitration Forum Code of Proce dure, which is here by incorporated into t h i s Agreement. This Ag ree ment sh a ll b e g ov e rn e d b y

and int e rpreted un der

the F e de ra l A rb itr a tio n A c t, 9 U. S.C. Section 1-16. This Ag ree ment to arbitrate includes, without limi tation, or ref und for service s rende red to the Resident by the Fa cility , violations of any rig ht gr anted to the Resident by law or by the Admission Ag ree ment, brea ch of contra ct, fra u dor misrepre sentation, neg lige nce, gr oss neg lige nce, malprac tice, or claims based on any depar ture fr om acc epted medic al or he alth car e or safe ty standards, as well as any and all claims for e quitable re lief or claims based on contra ct, tort, statute, war ranty , or any alleg ed br e a c h , d e f

ault, neg lige nce, f

raud , mis re pr e se ntatio n, su pp re ssi on of fa c t, or ind uc e me nt. Ho we ve r, thi s A g re e me nt s ha ll n ot l imi t th e Re sid e nt’ s r ig ht t o f ile a g r i e v an c e o r

c o mp l a i n tw i thth e F a c i l i ty. The pa rties agr ee that damag es awarde d, if any , in an ar bitration conducte d pursuant to this Ag ree ment shall be deter mined in acc ordanc e with the provisions of the state or f

eder al law a

pplicable to a com para

ble civil action, includingany prer equisites to, cred i t ag ainst, or limitations on, such dama g es. Any awa rd of the-3-

arbitrato r ( s ) ma

y b e e n te r e d

a s a ju d g me n t i nany

c o urt h av in g ju

r is d ic ti o n . Inthe event a court having jur isdiction finds any portion of this Ag ree ment unenfor cea ble, that po rt ion

sh a ll n ot be e ff

e c tiv e and the re ma ind e r of the Agre e me nt s ha ll r e ma in eff ective.
RESIDENT AND F ACILITY ARBITRATION AGREEMENT
I t is the intention of the parties to this Ag ree ment that it sha ll i n u re t o the benef it of and bind the par

t i es , t heir succ essors, and a ssigns, includingwithout lim itatio n th e a g e nts , emp loye e s and se rv ants of

the F a c ili ty , a

nd a ll p e rs on s w ho se claim is derived thr oug h or on behalf of the Reside nt, including a ny pare nt, spouse, sibling, child guardia

n, executor, leg al re prese ntative, administrator, or he ir of the Resident. The pa

rties furthe r intend that this Ag ree ment is to survive t h e l ives or exis tence of the pa

rties her eto. All claims based in whole or in p ar t o n the same inc ident, transac tion, or related cour se of c are or ser vices provi ded by

the Fa cility

to the Resident shall be arb itr a te d in on e pr oc e e din g . A c la im sh a ll be wa ive d a nd fo re ve r b arr e d if

it a ro se and should r easona

bly have been disc overe d prior to the date upon which notice of arbitration is given to the F acility or re ceive d by

the Resident and such claim is not p re s en t edi nth e a rb i tra t i o np ro ce ed i n g. The pa rties under stand and a g ree that thi s co ntrac t contains a binding arb itr a tio n p ro vis ion

wh ic h ma

y be e nf or c e d by the pa

rt ie s, and that by

e nte ri ngint o this arbitration ag ree ment, the parties are g iving up a nd waivingtheir constitutional ri g ht t o h ave any

c la im d e c ide d in

a c ourt of law b e fo re a

jud g e and

a jur y , a s w e ll a s any a pp e a l f ro m a de c isi on or awa rd of dama g e s. The Resident unde rstands that: ( a) he/she has the rig ht to seek leg al counse l c on c e rn ingthi s A rb itr a tio n A g re e me nt; (b ) e xec uti on of thi s A g re e me nt i s n ot a prec ondition to admis sion or to t h e fur nishing of se rvice s to the Resident by the F a c ili ty ; and

(c ) t his Agreem ent m ay

be re sc ind e d b y

wr itt e n n oti c e to t

he F a c ili ty fr om t he Re sid e nt w ith in t

hir ty da y s o f s ig natur e . I f no t re sc ind e d wi thi n th ir ty da y s, thi s Agre e me nt sh a ll re ma in in e ff e c t fo r a ll s ub se qu e nt s tay s at th e F a c ili ty , e ve n if th e R e s i d e n ti s d i s c h ar g e d f r o man d r e a dm i t t e d

t o th e F a c i l i ty. The unde rsig ned ce rtifies that he/she r ead this Ag ree ment, that it h as been fully explained to him/ her, that he/she under sta n d s i t s contents, that he/she ha s re c e ive d a cop y of th e prov isi on and tha t he /sh e is the Re sid e nt, or a pe rs on du ly a uth or ize d b y

the Re sid e nt o r o the rw is e to e xec ute thi s A g re e me nt a nd a c c e pt i ts te rm s.For e as e of r ef er enc e, we wi l l r ef

er t o N ur s i ng H om e as i t i f wer e t he s ol e def

endan t

. T he i dent i t y of t he ot her 2 d e fen d a n ts is no t cr iti c a l t o the re so lutio n o f t h is a p p e a l. -4- The se co n d p ag e of the Arbitration Ag ree ment is dated De cembe r 15, 2004, and be ars the signature of Patr icia Ray

born, as the D esig nated Repr ese n t at ive, and Christopher T . Wells, as the Fa cility ’s Authorized Repre sentative. The signatory line for the Resident is blank. After Daug hter signe d the Admission Ag ree ment, Dec edent was admitted to Nursing Home and was under t he NursingHome’s c are until she died in Febr uary of 2006.
On Dec ember

28, 2005, while Dec edent wa s still living, Da ug hter, a s her mother ’s per sonal repr esentative, filed a Complaint ag ainst the Nursing H o me, as we ll as Allenbrooke H ealth Care Ce nte r, Al le nb ro ok e He a lthCare Ce nte r d /b/ a/ B e ve rl y

En te rp ri se s T e nn e sse e , Inc ., and B e ve rl y Enterpr ises Tenne ssee, Inc. The Complaint alleg es that Dec edent suffe red multiple injuries which 2 wer e the r esult of NursingHome’s ne g lectful a nd defic ient course of ca

re. In response to the Complaint, Nursing Home fi l ed a Mot ion to Com pel Arbitration, based upon the Arbitration Ag ree ment that Daug hter sig ned. Discove ry relating to the Ar

bitration Agre e me nt e ns ue d, and

Da ug hte r, Mr . We lls , a

nd El ay ne Pos ton , M r. Wel ls’ dir e c t su pe rv iso r at a ll times releva

nt to the instant case, we re de posed. During the c ourse of the litigation, De cede nt passed awa y , and MatthewThornton, as the pr obate e state administrator, wa s substit uted for D aug hter (her einaf ter, the “ Dec edent’ s Estate”)

. On Dec ember 8, 2006, the trial court hear d Nursing Home’s Motion to Compel Arbitration, and ente rtained or al ar g ument fr o m al l p ar ties. At the conc lusion of the hear ing, the trial court denied Nur sing H ome’s Motion, stating that Da ug hter lac ked the r equisite authority to waive he r mot he r’ s r ig ht t o a c c e ss t

he c ourt s and

a tr ia l by jur y . A t th e he ari ngthe tr ia l ju dg e state d th a t:
In this instance , we know that Ira J ones is the per son who owns the ca use of action, either for damag es or for de ath. B y definition, she is the party to be cha rg ed under these circ umstances beca use she is the party truly ag ainst wh o m t he e nf or c e me nt i s so ug ht.
He re , of c ours e , we kn ow the tr ue pa rt y a g a ins t w ho m e nf

or c e me nt i s so ug ht, meaningIra Jones, did not sign this ag ree ment. And we know that Patricia Ray

bon had no powe r of attorney

. We know that she wa s not a court- appointed guardia n or conser vator.
In o the r w or ds , w e kn owthat sh e wa s n ot a pe rs on , q

uo te , la wf ull y authorized, end quote, by her mother , Ira Jones, to sign any leg ally binding doc ument on her be half. The Court is compelled to a c onclusion that there is no c ontrac t whatsoeve r to compel ar

bitration.-5- I t w ou ld s e e m to th e Court pa re nth e tic a lly

that th e fa c ili ty

and /or its administrator would have some adde d responsibility , once it is made known that the person be fore whom - - or with whom they

are deali n g h as no leg al authority , that they make some - - t hat they

make sure that the per son who signs is, in fa ct, either a lawf ul ag ent or that ther e is some incapa city befor e you can c arry the inquiry further

. In fac t, here , as poi nted out by the Court in some detail, the admissions intake pe rs on did no t eve n ma

ke sure that th is d a

ug hte r s ig ne d in

the pr op e r p la c e in s ome instances. That should e nd the inquiry and be a sufficie nt ba sis upon which to deny the motion, but we’ll g o further

.

. . . . He re , M s. Ray

bo n, in h e r a ff

ida vit and in he r d e po sit ion

te sti mony , s ay s, in e sse nc e , th a t he r m oth e r w a s p os se sse d o f a ll o f h e r f a c ult ie s a nd wa s p e rf e c tly capa ble of re ading , understanding , and sig ning a ll these documents, includingthe arbitration contrac t and its c oncomitant waiver of the rig ht to a jury trial for he rself. T h e nur s i n g h o m e h a s p o i n t e d t o n o e v i d e n c e t o th e c o n tr ar y. Moreove r, once awa

re that Patricia Ray

bon did not have the powe r of attorney , Christo p h er Wells, on behalf of the nursing

home, did nothing towa rd makin g any de te rm inatio n at al l as to Ms. J on e s com pe te nc e or la c k of it, if

y ou wi ll, and made no eff

ort whatsoeve r to have her e x ecute the documents for herse lf. Wit h all due respect and in candid response during or al ar g ument, counsel for the nurs ing ho me a sse rt s that the pr oc e ss that wa s f oll ow e d in

thi s c a se wa s b us ine ss as usual, if you will, and asser ts that the way

th is was done wa s the way that they have a lway s done it at t h i s particula r nursinghome, not only by this particular nurs ingho me , b ut b y

oth e rs a s w e ll; and

no t on ly that, by nurs ing ho me s he re and in oth e r j ur isd ic tio ns a s w e ll. Turning next to the questi on of so-called detrimental relianc e, which is one of the e lements of appar ent authority , the nursing home has established that it relied up on the a uth or ity that w ou ld b e a

pp are nt t o it s d e tr ime nt. Th e tr ou ble the re is, the nurs ingho me c an p oint to no de tr ime nt, if y ou wi ll, that it has suffer ed by

relianc e upon the a

uthority that it claims Ms. Ray

bon had. The nursinghome has concede d that all pay ments that were due to the nursing h o m e i ne x c h an g e f

o r th e s e r v i c e s r e n d e r e d

w e r e m a d e . It l o s tn o m o n e y.-6- At b es t , t h e nursinghome ca n only point to detriment, if y ou will, as being the c os t and e xpe ns e of lit ig a tin g the iss ue of wh e the r or no t th is c a se sh ou ld g o to arbitration. Qu i t e frankly , that is not thi s Court’s understandingof the ter m
“ de tr ime nta l r e lia

nc e ” in t his c on te xt. All things considered, the Court is compelled to a complete c onclusion that the motion to compel arbitration in this case should be denied, a nd it will be. . . .
On J anuar

y 19, 2007, the trial judg e issued an O rder Den y i n g Def

endant Allenbr ooke’s Motion to C ompel Arbitration, and inc orporated, by ref eren ce, the complete tra nscript of the De ce mb er

8 , 2 0 0 6 h ea ri n g. F ro m th a t or de r, De fe nd ants a pp e a l.
Issues As stated in their brie f, the De fenda nts/Appellants raise the f

ollowing issue:
1

. Did the Trial Court er r in deny ing A ppellant’s Motion to Compel Ar bit ratio n, wh ic h w a s p re dic a te d u po n a n A rb itr a tio n A g re e me nt that Patr ic ia Ray bon, a daughter of I

ra L ee Jones, signe d for he r mother in conn ec tion with her mother’s a dmission t o Appellant’s nur sing home ?
De c e de nt’ s E state ra ise s th e fo llo wi ngthr e e (3 ) i ssu e s:

1. Whether a daug hter with no documented a uthority whatsoeve r may

waive h e [ r ] m o th e r ’ s c o n s t i tu t i o n a l r i g h tt o a c c e s s t o th e c o urt s an d a tr i a l b y j ur

y. 2. Whe the r De fe nd ants br e a c he d the ir fi du c iary dutie s to the nurs ing -h ome resident by

enticingher da

ug hter to execute a

n arbitration clause.
3. Whe the r enfor c e me nt o f t he arb itr a tio n c la

us e in t his c a se is unconsciona

ble.
Stan dard of Revie w When ruling on the appea l of a de ni al of a motion to compel ar bitration, we follow the standard of

revie w that applies to benc h trials. Spann v. Am. Ex press Travel Related Se rvice s Co. , 2 2 4 S

. W

. 3 d

6 9 8 , 7 0 6 -0 7 (T en n . C t

. Ap p . 2 0 0 6 ). Ac co rd i n gl y , o ur r ev i ew o f th e tri al co urt ’s fi n d i n gs of fact are “de novo upon the re cord of the trial cour

t, acc ompanied by

a pre sumption of the corr ectne ss of the finding , unless the pre pondera nce of the evidenc e is otherwise.” Tenn. R. App. P. 1 3( d) . Q ue sti on s o f l aw a re lik e wi se re vie we d de no vo wi tho ut a pr e sumpt ion

of c or re c tne ss. Johnson v. J

ohnson , 37 S.W .3d 892, 894 (Tenn. 2001)

.O ur hol d i ng here do es not de vi at e f rom t he ho l d i ng i n O w en s v. N a t i o n a l H ea l t h C o rp , - - - S. W

. 3d - - - , 2007 3 W L 3 2 8 4 6 6 9 (T enn. 20 0 7 ). I n O wens , t he A rbit rat i o n A greem ent exp res sl y pro vi d ed t hat “ ‘ t hi s agreem ent f o r bi nd i ng ar bi t r at i on s hal l be gove r ned by and i nt er pret ed i n acc ordanc e wi t h t he l aw of t he s t at e whe r e t he C ent er i s l i cen s ed. ”’ I d. a t * 5. H er e, t h e Ar bi t r at i on Ag r ee men t h ad n o s u ch pr ov i s i on . Rat h er , i t pr ov i ded t h at “ [ t ] h i s Ag r ee men t s h al l be g ov er n ed by a n d i n t er pr et ed u n der t h e Fe der al A r bi t r at i on A ct , 9 U

. S. C. Sec t i on 1- 16. ” Acc or di n g l y , i f t h e Ar bi t r at i on A g re e m e n t i n this c a se w a s e n fo rc e a b le , f e d e ra l l a w w o u ld a p p ly.

-7- Discussion The main issue on a

ppeal is whe ther the tria l court er red in denying Nursing Home’s motion to compel ar

bitration. On appe al, NursingHome make s sever al ar g uments: 1) that bec ause the Arbitration Ag ree ment selec ts the Fe dera l Arbitration Ac t (her einaf ter, “ FAA ”) a s the g overning body of law, the trial co u rt should have a pplied the FA A, which pr esumes that the a rbitration provision is valid and enfor cea ble; 2) th at Da u gh t erhad ac tual and appa rent a uthority to contrac t with Nursing Home, thereby binding De cede nt to the Arbitration Ag ree ment; 3) that, by her ina ction, Dec edent r atified the c ontrac ts signed by Daug hter; and 4) that Dec edent mus t be estopped f rom challeng ing the Arbitration Agr eeme nt beca use she manif

ested a ssent to Daug hter’s c ontrac ting on her be half.
Dec edent’ s Estate conte nds that 1) Daughter lac ked any ty pe of a uthority t o waive he r mother’s rig ht to a jury trial; 2) Daughter infor med NursingHome that she did not possess a “ Power of Authority” for

her mother ’s matters, 3) Dec edent did not ratif y Daug hter’s sig ning a

way Dec edent’ s rig ht to a jur y t ri al; and 4) Nursing Home bre ache d its fiduciary duty by including the Arbitration Ag ree ment in the Admissions Agre ement pape rwork.
The Fe de ra l Ar

bit ra tio n Ac t’

s Ap plic ab ili ty As an i n i t i al m at t er , we ad dre s s th e p re em p t o ry p o we r o f t h e F AA

. C i t i n g Flanary v. Car l G re go ry Do dge of J

oh ns on City

, LLC , NursingHome first a rgues that, bec ause the Ar bit ratio n A g re e me nt s tate s th a t th e pa rt ie s a g re e to b e g ov e rn e d b y the F AA , th is C ourt

sh ou ld honor the sele ction as binding

. Flan ar yv . Ca rl G re

go ry Do dge of J

oh ns on City

, LLC , No. E2004-00620-COA- R3CV, 2005 W L1277850, at *4 (Te nn. Ct. App. May 31, 2005), perm. app. denied (T e nn . D e c . 5 , 2 00 5) . We a g re e wi th Nur sin g Ho me that if the contra ct is valid and enfor cea ble, that the for

um selection cla

use is binding. Howeve r, first we must determine 3 whether the Dec edent is, indee d, bound to the Arbitration Ag ree ment. Acc ording ly , we turn to a discussion of ag ency

law.

Ac tua l an d Ap pa re nt Aut

hority

In Tenne ssee, a

putative ag ent’s author ity consists of actua l or appa rent a uthority

. Miliken Group, I

nc. v. H ays Nissan, Inc., 86 S.W .3d 564, 567 (Tenn. Ct. App. 2001). A s stated in America

n J urisprudenc e, “[t]he relationship betwee n an ag ent and a principal is a c ontrac tual-8-

on e . . . A s b e tw e e n th e pa rt ie s to the re latio ns hip , th e re mus t be a me e tin g of

the min ds in e sta bli sh ingthe a g e nc y , a

nd the c on se nt o f b oth

the pr inc ipa l and

the a g e nt i s n e c e ssa

ry to c re a te the ag ency .” 3 Am. Jur. 2d Age ncy § 15 (2007). F or an a g ency relationship t o arise, the “princ ipal must int end the a g ent to act f or him or her , the ag ent must intend to acce pt the authority and ac t on it, and the intention of the parties must find expression either in wor ds or conduct be tween the m.” Id. Fur ther, a n ag ency relationship i s only

cre ated “ at the will and by the ac t of the principa l, and its ex istence is a f act to be pr oved by

trac ing it to some ac t of the alleg ed princ ipal, and turns on fa cts conc erningthe under standing betwee n the alleg ed princ ipal and ag ent.” Id.

Th e do c tr ine of

a pp are nt a uth or ity ha s b e e n c on sis te ntl y

de fi ne d a s f

oll ow s: (1 ) s uc h a uth or ity a s th e pr inc ipa l kn ow ing ly pe rm its the a g e nt t o a ssume o r w h i ch h e h o l d s th e a gen to u tas p o s s es s i n g; (2 ) s uc h a uth or ity a s h e a pp e ars to h ave by

re a so n o f t

he a c tua l a

uth or ity wh ic h h e ha s; (3) suc h authority

as a r easona

bly prudent man, usingdiligenc e and dis c re tio n, in v ie w o f t

he pr inc ipa l' s c on du c t, w ou ld n a tur a lly su pp os e the a g e nt t o po sse ss.
Franklin Distrib. Co., Inc. v . Crush Intern. ( U.S.A.) , Inc ., 72 6 S. W.2 d 9 26 , 9 30 -3 1 ( Te nn . Ct

. App. 1986) (citingSouthern Ry. Co. v. Pic kle, 19 7 S. W. 6 75 , 6 77 (T e nn . 1 91 7) ; V.L. Nicholson Co. v. Transcon Inv. and Fin. Ltd., Inc., 595 S.W .2d 474, 483 (Tenn. 1980) , Rich Printing Co. v. McKellar's Estate, 46 Te nn . App . 4 44 , 3 30 S.W. 2d 36 1, 37 6 ( 19 59 ); Rural Educ. Ass’n v . Bush, 42 Te nn . App . 3 4, 29 8 S. W.2 d 7 61 , 7 66 (1 95 6) ; Hart v. First Nat’l Bank, 690 S.W .2d 536, 539 (T e nn . Ct . App . 1 98 5) ). Mo st n ota bly , “ a pr inc ipa l is re sp on sib le fo r t he a c ts o f a

n a g e nt w ith in is appare nt authority

only wher e the pr incipal himself by his acts or c onduct has c lothed the ag ent with the appea

ranc e of a uthority , and not wher e the a g ent' s own conduc t has cre ated the a ppare nt authority .” Southern Ry. Co., 197 S.W . at 675.

Her e, Nur sing H ome contends that Daug hter’s pa rticipation in handling Dec edent’ s medical matter s is proof of a principal/ ag ent re lationship between D ece dent and Da ug hter. As support for its argument, NursingHome ar g ues that Da ug hter made medical de cisions with the do c tor s d ur ingDe c e de nt’ s h os pit a l st ay in 2 00 4, signe d p a

pe rw or k a dmi tti ngDe c e de nt t o another nursing home prior to De cede nt’s admittance to De fenda nt Nursing Home, met with Mr. Wells, and signed Nursing Home’s a dmissions paper work. At he r deposition, Daug hter testified that: Daug hter told Mr. Wells that she did not have “Powe r of Attorne y ” for her mother , Daug hter’s a

unt and uncle ma de the de cision to admit Dece dent to NursingHome bec ause the uncle’ s daug hter wor

ked ther e; Daughter kne w only one of D ece dent’s doctor s, and wa s not familiar with De cede nt’s other doc tors; Daug hter did not know of a ny signific ant eve nt in 2004-9-

wher e her mother, De cede nt, relied on Da ug hter’s a ssistance; and D aug hter did not sign c hecks for De cede nt, sell or buy

proper ty for De cede nt, obtain a re sidence for De cede nt, acquire g ov e rnme nt a id f

or De c e de nt, se c ur e ins ur anc e fo r D e c e de nt, or a c qu ir e or

dis po se of

pr op e rt y for De cede nt prior to Dec edent’ s admission to Nursing Home

. Daug hter wa s not appointed to be De cede nt’s attorney -in-fa ct until May 11, 2005, five (5) months after D ece dent’s admission to Nursing Home. Additionally , the Power of Attorney document does not ve st Daug hter with powe r to make he alth car e dec isions, si g n contra cts on Dec edent’ s behalf, or

waive D ece dent’s constitutional rig hts. Rather, the Power of Attorney document vests Da

ug hter with the “ full power a nd authority

over [Dec edent’ s] property , rea l and persona l.” Fur

ther, our r eview of

the re cord r evea ls that, at the time of admission to Nursing Home, De cede nt had not been inf ormed by anyone, includingher f

amily , that she wa s being admitted to a nursinghome. At the time of a dmission, Nursing Home c oncede s that Dec edent was a mentally competent pe rson at all re levant times; howeve r, NursingHome neve r aske d Dec edent if she wanted to sig n the Admissions paperwor k or re view the instruments there afte r.
We find the Ra ite ri case to be applica ble to our dec ision. Raiteri ex re l Cox v. NHC Healthcare

/Knoxville, Inc. , No. E2003-00068- COA-R9-CV, 2003 WL23094413, at *1 (Te nn. Ct. App. Dec. 30, 2003) ( no perm. app. filed ). In Ra ite ri , Mr. Cox met with the nursing home’s a dmi ssi on s c oo rd inator

to m ake arr ang e me nts fo r h is w if e ’s a dmi ssi on

so that Mr s. Cox c ou ld rec eive phy sical thera

py and vocational reha

bilitation s ervic es. At the mee ting, Mr. Cox was asked to sig n the nursinghome’s “A dmission and Financia l Contract” on his wife ’s beha lf, althoug h his wife wa s not mentally incompetent. Af

ter discussingthe enf

orce ability

of the contra ct, the cour

t stated:
[ W ] e c o n cl u d e t h atth e e v i d en ce b ef o re u s p re p o n d er at es aga i n s tth e t ri al co urt 's implicit decision that Mr. Cox had author ity to sign the a dmission agr eeme nt on be ha lf of his wi fe . T he re is a

bs olute ly no e vid e nc e that he ha d h e r e xpre ss authority to sign for

her. We a lso hold that the defenda nt cannot re ly

upon the conce pt of appa

rent a uthority . The e vidence ref lects that Mrs. Cox had her mental fa c ult ie s, wa s “ sh arp e r” tha n h e r h us ba nd , a nd wa s o the rw ise in a

po sit ion to ind ic a te wh e the r s he a sse nte d to the te rm s o f t he se signif

ic ant c on tr a c t pr ov isi on s. The re cord is also de void of any exigent cir cumstance s that would clothe Mr. Cox wi th a pp are nt a uth or ity to b ind his wi fe to t

he a dmi ssi on

a g re e me nt, pa

rt ic ula rl y the alter native dispute re solution provisi ons. We certa inly find nothing in the rec ord bef

ore us, e ither fa ctually

or leg ally , war

rantinga holding that Mr. Cox had the ri g ht t o w a ive his wi fe ' s v e ry va lua ble c on sti tut ion a l r ig ht t o a jur y tr ia l to adjudicate her r ights in this matter. As the a dmissions coordinator ac knowledg ed, Mrs. Cox “wa s capa

ble of unde rstanding ” the a dmission agr eeme nt. The admissions coordinator did not ade quately explain why

she did not insist upon Mr s. Cox si g nin g the a dmi ssi on a g re e me nt, or , at a

min imum, why

sh e did no t a sk Mrs. Cox to ratify

what her husband had pur

ported to do on her

behalf

.-10- In summary , we hold that Mr. Cox di d not have the a ctual or a ppare nt authority to bind Mrs. Cox to the alternative dispute resolution provisions in the admission ag ree ment. Fur thermore , these provisions, espe cially the waive r of the ri g ht t o a jur y tr ia l, a re outsi de the re a so na

ble e xpe c tatio ns of

a re a so na ble co n s u m er , an d , h en ce , un en fo rc eab l e. Fo l l o wi n g Eyring and Ho we ll, we hold that the trial cour

t erre d when it dec ree d that the mediation and a rbitration terms we re enfor cea ble. Ther efor e, we conclude that the judg ment below must be re verse d.

Ra ite ri , 2003 WL230994413, at *9.

Since Ra ite ri , o the r T e nn e sse e c a se s h ave fo llo we d s imi lar r a tio na le , f ind inga uth or ity if g iven expressly , either through oral e x pression or via a Power of A ttorney

document, and f

inding no authority

if the principa l did not ex hibit som e sort of a ct to convey the authority

. See O wens v. Nat’l Health Corp. , No. M2005-01272-SC-R11-CV, 2007 WL3284669, at *15-20 (T enn. Nov. 8, 2007)(

Petition to Rehear granted Fe b. 7, 2008)(holdingthat the power of attorne y document author ized the attorney -in-fa ct to enter into the arbitration agree ment on behalf of the pr inc ipa l) ; Nece

ssary v. LifeCare Ctrs. of Am., Inc. , N o . E 2 0 0 6

- 0 0 4 5 3

- CO A

- R3

- CV , 2 0 0 7 WL 3446636, at *3-4 (T enn. Ct. App. Nov. 16, 2007) ( no perm. app. filed ) ( ho ldi ngthat be c a

us e Pla int if f h a d e xpre ss a

uth or ity to s ig n a ll o f t

he a dmi ssi on

do c ume nts , s he a lso ha d a uth or ity to sign the arbitration ag ree ments on the Dec edent’ s behalf a s one of those a dmission documents); but see He ndrix v. LifeCare Ctrs. of Am., Inc. , N o . E 2 0 0 6

- 0 2 2 8 8

- CO A

- R3

- CV , 2 0 0 7 WL 4532876, at * 14 (Te nn. Ct. App. Dec. 21, 2007) ( no perm. app. filed ) ( ho ldi ngthat D ur a

ble Pow e r o f A tto rn e y

wa s n ot e ff

e c tiv e a t ti me of

Mo the r’ s a dmi ssi on

be c a us e Mo the r w a s st ill a

ble to make her

own medica l decisions at the time of a dmission, t hus, Daug hter’s w aiving of Mother’s r ight to jury

trial was une nforc eable ).
Ba sed on the re cord be fore us and the trial c ourt’s finding s of fa ct, we c onclude that no ac tu al o r ap p ar en tage n cy re l at i o n s h i p ex i s t edb et we en De ce d en tan d Dau gh t er . Al th o u gh Da ug hte r a ssi ste d D e c e de nt i n b e inga dmi tte d to bo th n ur sin g c are fa c ili tie s, he r i nv olv e me nt i n most aspects of the D ece dent’s life w as quite limited, as Dec edent mana g ed her own per sonal a ff a ir s. No Pow e r o f A tto rn e y e xiste d at th e tim e Da

ug hte r s ig ne d th e Ad

mis sio ns Agre e me nt, and she did not purpor

t to be Dec edent’ s attorney -in-fa ct. Reg ardle ss of the extent of Daug hter’s involvement in Dece dent’s per sonal matters, Nur sing H ome simply cites no sing le ac tion by

the De c e de nt wher e she indicated to NursingHome or to Da ug hter that Da

ug hter wa s her a g ent for the purpose in que stion. Se e Ne c essa ry , 2007 WL3446636, at *3-4. Ratification NursingHome also a

rgues that, re g ardle ss of whethe r Da ug hter ha d authority

to bind Dec edent to the Ar

bitration Ag ree ment, Dec edent r atified the c ontrac ts signed by Daug hter throug h her ina ction. In Tenne ssee, it is well-settled that, “ wher e a pa rty with full knowledge of the fa cts involving him in liabilit y acquie sces in what has bee n done, he the reby sanctions it; and-11-

silence a nd inaction on his part in such a case , afte r a r easona

ble time, will amount to a ratifica tion, and make him liable.” Fite v. W iel , 46 S.W . 330, 334 (Tenn. Ct. App. 1898) ( quoting W inham v. Crutcher , 78 Tenn. 610, 615 (1882) ) (e mphasis added) . Gene rally , “full knowledg e” require s knowledg e “of

all materia l fac ts and circ umstances r elative to the una uthorized act or transac tion.” Mo nu me nta l Lif e In s. Co. v . P uc k

e tt , N o . W2 0 0 5

- 0 0 0 8 3

- CO A

- R3

- CV , 2 0 0 6 WL 44037, at *3 (Te nn. Ct. App. J an. 9, 2006), perm. app. de nied (Tenn. Aug . 21, 2006), (quoting Gough v. I

ns. Co. of N

. Am., 157 Tenn. 546, 549-50 ( 1928)). NursingHome conte nds that, after Daug hter sig ned the Admission Ag ree ment, including the Arbitration Agr eeme nt, she told her mother that she had sig ned these instruments. Nursing Home ar g ues that De cede nt’s failure to protest, dissent, or otherwise disaffirm he r daughter’s acts c onstitut es ratification. Def endants re ly

on the followingtestimony from Da ug hter’s deposition to establish ratification:

Q. . . . [d] id she eve r objec t or - - or somehow communicate her disapproval of

y our sig ning the Admission Agr eeme nt or the Arbitration Ag ree ment on her be half.

. . . . A. Uh-uh. Q. Okay . Did y ou ever

consult y our mother - - or did you ever notify her or tell her that y ou signe d the Arbitration Agr eeme nt or the Admission Agre e me nt?
A. Ye s. Q. Okay . And at that time, did she say something to the e ffe ct that y ou should not have sig ned those?
A. No. Q

. D i d y o ur m o th e r , a s f

ar a s y o uc o u l d

t e l l , w a n tt o b e a tA l l e nb r o o k e ?
A. No. Q. Di d s h e e v er t el l y o uth ats h e w an t edt o l ea v e t h e f ac i l i ty an d go elsewhe re?
A. No.-12-

We are hard- presse d to find that this or any other portion of D aug hter’s te stimony shows that Dec edent ha d full knowledg e of a ll material fa cts and c ircumstance s relate d to Daug hter signingthe admission instruments. The materia l terms of the tra nsaction ar e not discussed, the circ umstances of

the sig ning a

re not set f

orth, and nothingindicates whe n this discussion t ook place . Additionally , Daug hter’s te stimony reve als that she under stood very littl e of what Admission Agr eeme nt and Arbitration Agr eeme nt provisions contained. We do not find that the evidenc e pre sented rise s to the level of “ full knowledg e” a s set out in Puck ett. Id . at *3. Acc ording ly , we f

ind that the trial court did not er r by finding that no ratification occurr ed under the se fa c ts. Mutu al A ssent NursingHome ra ises one fina l issue of whethe r De cede nt’s continuation of re siding at and usingNursingHome’s se rvice s indicates her assent to the Ar

bitration Ag ree ment. Specifica lly , NursingHome ar g ues that the Admission Ag ree ment require d Dec edent to pay for the servic es re ceive d from her own funds or through Medica id and Medica re pa y ments. Daug hter e x ecute d the forms in the Admissions Ag ree ment nece ssary to obtain the Medica id and Medica re pa y ments, and De cede nt rec eived the be nefits of he althcar e and a residenc e fr om NursingHome. Ac cording ly , NursingHome ar g ues, De cede nt manifested he r asse nt to the Ad mis sio n A g re e me nt. Acc ordingto basic contra ct principles, a “contr act ‘ must result from a mee ting of the minds of the parties in mutual assent to the ter ms, must be based upon a suf ficient c onsideration, fre e fr om fraud or

undue influenc e, not ag ainst public policy and suff iciently definite to be enfor ced.’ ” Reno v . SunTrust, Inc., No . E 20 06 -0 16 41 -C OA -R 3- CV , 2007 WL907256, at *4 (Tenn. Ct. App. Mar . 26, 2007) ( no perm. app. filed ) ( qu o t i n g Doe v . HCA Health Serv s. of Tenn., Inc., 46 S.W .3d 191, 196 (Tenn. 2001) (citations omitted)). We have alre ady held that Daug hter did not have the authority to sign the A rbitration Ag ree ment on Dec edent’ s behalf, a nd that, beca use De cede nt did not have knowledg e of the materia l fac ts and circ umstances surroundingthe instrument, she did not ratify the Arbitration Agr eeme nt by her ina ction. Acc ording ly , we c annot find that De cede nt manifested a ssent to Daug hter’s c ontrac ting on he r behalf . Due to our de cision reg ardingthe ag ency , ratification, and mutual assent issues, all other issues are prete rmitted.
Conclu sion
For the fore g oing r easons, we aff irm the judg ment of the trial c ourt. Costs of this appeal are a sse sse d to the Ap pe lla nts , A lle nb ro ok e Nurs ingand Re ha bil itatio n Ce nte r, L L C, Al le nb ro ok e He a lthCa

re Ce nte r, Al le nb ro ok e He a lthCare Ce nte r d /b/ a/ B e ve rl y

En te rp ri se sT e n n e s s e e , In c . , a

n d B e v e r l y E n t e r

p r i s e s T e n n e s s e e , In c . , an d th e i r s ur e ty.

___________________________________ DAVI D R. FARMER, J UDGE