Court Opinion

ID: 4655807
Source: CourtListenerOpinion
Date Created: 2021-01-29 15:06:34.791257+00
Date Added: 2024-06-11T08:00:30.899671
License: Public Domain

RENDERED: JANUARY 22, 2021; 10:00 A.M.
                     TO BE PUBLISHED

           Commonwealth of Kentucky
                   Court of Appeals

                     NO. 2019-CA-1923-MR

CAMBRIDGE PLACE GROUP, LLC
D/B/A CAMBRIDGE PLACE;
CAMBRIDGE PLACE PROPERTIES,
LLC; LEGACY HEALTH SERVICES,
INC.; JAY FRANCES; KIMBERLY
SMITH; AND CARA W. CLARK, IN
HER CAPACITY AS
ADMINISTRATOR OF CAMBRIDGE
PLACE GROUP LLC D/B/A
CAMBRIDGE PLACE                                      APPELLANTS

           APPEAL FROM FAYETTE CIRCUIT COURT
v.        HONORABLE ERNESTO M. SCORSONE, JUDGE
                  ACTION NO. 19-CI-00106

VICTORIA MUNDY; AND JOHN
DOES 1 THROUGH 3, UNKNOWN
DEFENDANTS                                            APPELLEES

                          OPINION
                         AFFIRMING

                         ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; DIXON AND JONES, JUDGES.
DIXON, JUDGE: Appellants, collectively referred to as “Cambridge” herein,

appeal from an order of the Fayette Circuit Court entered on November 27, 2019,

denying their motion to compel arbitration and stay the proceedings. After careful

review of the briefs, record, and law, we affirm.

                                  BACKGROUND

             On November 4, 2011, Thomas Mundy, Jr., executed a durable power

of attorney (“POA”), naming his wife, Victoria Russell Mundy, as his attorney-in-

fact. In August 2016, Thomas was admitted as a resident to Cambridge Place, a

nursing care facility. Thomas was incompetent at the time of admission,

necessitating that Victoria complete the process on his behalf.

             Cambridge proffered Victoria a voluntary alternative dispute

resolution agreement—not required for admission—wherein the resident, or the

resident through their legal representative, agreed to arbitrate any disputes with

Cambridge. The signature block contained three lines: Thomas was named as the

resident on the first line; Victoria signed on the second line, entitled “Signature of

Resident/Legal Representative”; and “wife” was written on the third line, entitled

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

etc.).”

             Following the death of her husband, Victoria initiated the underlying

suit against Cambridge in 2019 alleging multiple claims of negligence on behalf of

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Thomas’s estate, as well as claims of wrongful death1 and loss of consortium,

individually. Cambridge moved to stay the proceedings on Victoria’s individual

claims and to compel arbitration as to the estate’s claims. Victoria opposed the

motion. The court heard arguments wherein the parties debated whether Victoria

had signed the agreement in her capacity as Thomas’s attorney-in-fact and whether

the POA granted the authority to bind Thomas to arbitration.

               Ultimately, the circuit court denied the motion finding that Cambridge

had failed to sufficiently demonstrate the existence of a valid arbitration agreement

between Cambridge and Thomas where Victoria, regardless of whether she had the

authority to sign as attorney-in-fact, only signed in her capacity as wife. This

appeal followed. Additional facts will be introduced as they become relevant.

                               STANDARD OF REVIEW

               A written pre-dispute agreement between parties to submit to

arbitration is “valid, enforceable, and irrevocable,” absent grounds not applicable

to this matter. KRS 417.050. As the party seeking to compel arbitration,

Cambridge had the initial burden of establishing a valid agreement. Ping v.

Beverly Enters., Inc., 376 S.W.3d 581, 590 (Ky. 2012). Kentucky rules of contract

1
  Kentucky Revised Statutes (KRS) 411.130(1) mandates that wrongful death claims must be
brought by the personal representative of the deceased. However, the deceased’s beneficiaries
are the real parties in interest whose rights cannot be divested by any action of the deceased,
including an otherwise valid agreement to arbitrate. Ping v. Beverly Enters., Inc., 376 S.W.3d
581, 597-600 (Ky. 2012).

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formation govern this inquiry. Id. It is a fundamental principle of contract

formation that to be valid and enforceable, there must be voluntary and complete

assent by parties having the capacity to contract. Extendicare Homes, Inc. v.

Whisman, 478 S.W.3d 306, 321 (Ky. 2015), rev’d in part, vacated in part by

Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S.Ct. 1421, 197 L.Ed.2d 806

(2017). An attorney-in-fact can assent on the principal’s behalf if the authority to

do so is conferred by the POA instrument. Id.

             Cambridge’s claims of error are preserved. Accordingly, we review

the circuit court’s rulings regarding the existence of a contract de novo. Ping, 376

S.W.3d at 590.

                                     ANALYSIS

             Cambridge asserts the validity of the arbitration agreement is

established by Thomas’s POA and cannot be invalidated merely by Victoria’s

designation as wife. Cambridge notes that Kentucky law does not require a party

to explicitly state on the face of the contract their status as an attorney-in-fact and

cites in support Pannell v. Shannon, 425 S.W.3d 58, 64 (Ky. 2014). Cambridge

further argues that because the contract is clear that Thomas was the intended

party, Victoria had to be signing in her representative capacity as attorney-in-fact.

Victoria disagrees, arguing the signatory’s designation of legal representative

capacity controls, and she urges this Court to consider the analogous, but

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unpublished, decision of Kindred Nursing Centers Ltd. Partnership v. Butler, No.

2013-CA-000880-MR, 2014 WL 3722083 (Ky. App. Jul. 25, 2014).2

               Butler is directly on point with the matter at issue. Therein, a

resident’s son, who did not contest that he held a POA, signed a voluntary

arbitration agreement on behalf of the resident. Id. at *4-5. In a signature block

that is nearly identical to the one at issue here, the resident’s son signed his own

name and designated his legal representative capacity as “son.” Id. Based on the

signatory’s designation as son, a panel of this Court upheld the circuit court’s

determination that there was not a valid agreement to arbitrate between the resident

and the nursing home. The Butler Court reasoned that “[i]t is undeniable that a

signature of an individual can signify a vast array of legal relationships[,]” and

absent an indication of the capacity under which a signature was executed, the

parties were bound by the capacity in which the agreement was signed. Id. at *5.

               We find Butler to be persuasive. 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 Victoria’s silence but rather her affirmative

avowal that she was acting in a separate capacity. In her capacity as wife, Victoria

was authorized to make limited decisions on behalf of Thomas; however, the pre-

2
 Pursuant to Kentucky Rule of Civil Procedure 76.28(4)(c), an unpublished opinion rendered
after January 1, 2003, may be cited for consideration where there is no published authority that
would adequately address the issue at bar.

                                               -5-
dispute arbitration agreement was outside that scope. See generally GGNSC

Stanford, LLC v. Rowe, 388 S.W.3d 117, 124 (Ky. App. 2012). Accordingly, the

circuit court did not err in finding there was not a valid agreement between

Cambridge and Thomas.

              Moreover, even if this Court were to find that Victoria acted as

Thomas’s attorney-in-fact, we would nevertheless affirm as she lacked the

authority to bind Thomas to the agreement. While the circuit court did not reach

this issue, the parties fully argued the matter, both before the circuit court and in

their respective briefs, and this Court is permitted to affirm on other grounds.

Fischer v. Fischer, 348 S.W.3d 582, 589-90 (Ky. 2011), abrogated on other

grounds by Nami Res. Co. L.L.C. v. Asher Land & Mineral, Ltd., 554 S.W.3d 323

(Ky. 2018).

              The construction of a POA is a question of law. Ping, 376 S.W.3d at

590. “[A]n 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.” Id. at 592

(internal quotation marks and citation omitted).

              Cambridge argues the POA herein authorized Victoria to agree to pre-

dispute arbitration as it granted her the authority to: “(1) draw, make, and sign any

and all checks, contracts, deeds or agreements, and exercise all of [Thomas’s]

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voting rights over assets owned by [him]; . . . (7) institute or defend legal actions

concerning [Thomas] or [his] property; . . . [and] (15) do and perform in [his] name

all that [he] might individually do.” However, Cambridge has ignored the limiting

language concerning the enumerated power granted. After enumerating fifteen

specific grants of authority, the document then provides a summary of when those

powers may be employed:

             This Power of Attorney authorizes my Attorney-in-Fact
             to make various property related decisions on my behalf,
             some of which may relate to my healthcare.
             Accordingly, I confirm that my Attorney-in-Fact will be
             treated as my personal representative as provided in 45
             CFR 164.502(g)(2) to the extent necessary to carry out
             any purpose of this Power of Attorney. However, my
             Attorney-in-Fact may not make any health care
             decisions on my behalf.

Appellant Brief Appendix B (emphasis added). Clearly, pursuant to this grant of

authority, Victoria, as attorney-in-fact, possessed no power to obligate Thomas to

an arbitration agreement related to his healthcare. This conclusion is affirmed by

our Supreme Court’s decision in Kindred Nursing Centers Ltd. Partnership v.

Wellner, 533 S.W.3d 189 (Ky. 2017), cert. denied, 139 S.Ct. 319, 202 L.Ed.2d 217

(2018).

                                          -7-
                                  CONCLUSION

             Therefore, and for the foregoing reasons, the order of the Fayette

Circuit Court denying Cambridge’s motion to compel arbitration and stay the

proceedings is AFFIRMED.

             JONES, JUDGE, CONCURS.

             CLAYTON, CHIEF JUDGE, CONCURS IN RESULT ONLY AND

FILES SEPARATE OPINION.

             CLAYTON, CHIEF JUDGE, CONCURRING IN RESULT ONLY: I

write separately because this Court need not address whether the language in the

power of attorney granted Ms. Mundy the authority to agree to arbitration. The

trial court’s order read: “Without addressing the validity of the power of

attorney document in the Record, the document named Ms. Mundy as his

attorney-in-fact. Thus, Ms. Mundy may have had the legal authority to sign the

Arbitration Agreement as Mr. Mundy’s attorney-in-fact, but she did not . . . .”

(Emphasis added.) The trial court did not rule on the powers given in the

document and there is no reason for this Court to address it.

             I agree that the decision should be affirmed based upon the reasoning

given by the trial court.

                                         -8-
BRIEFS FOR APPELLANT:    BRIEF FOR APPELLEE:

Emily W. Newman          Lisa E. Circeo
Paul A. Dzenitis         Hannah R. Jamison
Rebecca R. Schafer       Lexington, Kentucky
Louisville, Kentucky

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