Court Opinion

ID: 4465068
Source: CourtListenerOpinion
Date Created: 2019-12-17 22:11:09.543312+00
Date Added: 2024-06-11T14:53:35.663396
License: Public Domain

12/17/2019
                  IN THE COURT OF APPEALS OF TENNESSEE
                               AT JACKSON
                                  September 18, 2019 Session

              DONNA FELECIA WATSON v. QUINCE NURSING &
                  REHABILITATION CENTER, LLC, ET AL.

                     Appeal from the Circuit Court for Shelby County
                       No. CT-004192-17 Gina C. Higgins, Judge
                        ___________________________________

                              No. W2019-00261-COA-R3-CV
                          ___________________________________

This is an appeal from the trial court’s denial of a motion to compel arbitration. The
subject arbitration agreement was executed in connection with a patient’s admission to a
nursing home facility and signed by the patient’s son. The trial court found that the son
lacked authority to bind his mother to the agreement. For the following reasons, we
reverse and remand for further proceedings.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Reversed and
                                    Remanded

CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J., W.S., and KENNY W. ARMSTRONG, J., joined.

Craig C. Conley, Ormonde B. Landry, S. Keenan Carter, Brent E. Siler, and Kathryn
Kinnison Van Namen, Memphis, Tennessee, and William Davis Frye, Ridgeland,
Mississippi, for the appellant, Quince Nursing & Rehabilitation Center, LLC.1

Louis P. Chiozza, Jr., and Christopher W. Lewis, Memphis, Tennessee, for the appellee,
Donna Felecia Watson.

Kevin Baskette, Memphis, Tennessee, for the appellee, Mukesh A. Jain, M.D.

        1
           Quince was represented by Craig Conley and Ormonde Landry when its original brief was filed.
Thereafter, notices of appearance were filed by four attorneys from a different firm, and Quince’s reply
brief lists only those four attorneys. However, from our review of the record, the original attorneys did
not file a motion to withdraw. As such, we have listed all attorneys of record as of the date of this
opinion.
                                         OPINION

                          I.   FACTS & PROCEDURAL HISTORY

        Plaintiff, Donna Felecia Watson, instituted this wrongful death and health care
liability suit on behalf of her deceased mother, Marzella Damper, and the heirs at law of
of Marzella Damper. Plaintiff named as defendants Quince Nursing and Rehabilitation
Center, LLC (“Quince”), and Dr. Mukesh A. Jain. The alleged negligence occurred
while Ms. Damper was a patient at Quince.

       Quince filed a motion to compel arbitration and stay the proceedings. Quince
asserted that Ms. Damper’s son, Marvin Damper, had executed an arbitration agreement
when signing admission paperwork on her behalf. Thus, it asked the court to enforce the
arbitration agreement and require the parties to participate in binding arbitration. Quince
argued that the arbitration agreement was “valid and enforceable” and insisted that
Marvin Damper was authorized to sign the agreement on his mother’s behalf. It asked
the court to consider matters outside the pleadings and submitted the arbitration
agreement and a durable power of attorney for health care executed by Ms. Damper.
Quince argued that the language of the arbitration agreement itself was sufficient to grant
Marvin Damper authority to bind his mother. Alternatively, it submitted the durable
power of attorney for health care, which was executed by Ms. Damper years earlier and
named Marvin Damper and another daughter as Ms. Damper’s joint attorneys in fact for
health care.

       Plaintiff filed a response in opposition to the motion to compel arbitration, arguing
that the agreement was unenforceable because Marvin Damper did not have authority to
bind his mother to the agreement. Plaintiff argued that the durable power of attorney for
health care was only to become effective upon the incapacity of Ms. Damper, and in any
event, it would only apply to “health care” decisions and not a voluntary arbitration
agreement. She also asserted that the language in the arbitration agreement itself was
insufficient to grant authority to Marvin Damper.

        Quince filed a reply along with deposition testimony of Marvin Damper in a
further effort to establish that he had actual or apparent authority to bind his mother to the
arbitration agreement. During his deposition, Marvin Damper testified that Ms. Damper
knew that he was signing the admission paperwork on her behalf and that she gave him
“permission to sign everything on her behalf.” Based on the entire record, Quince argued
that the trial court should grant its motion to compel arbitration.

        After a hearing, the trial court denied Quince’s motion to compel, rejecting each of
its arguments regarding the authority of Marvin Damper. First, the trial court found that
no authority was established pursuant to the language used in the arbitration agreement
itself. Next, it found that the durable power of attorney was not triggered because Ms.
                                              -2-
Damper was not incompetent, and also, the arbitration agreement was a “non-healthcare
issue.” And finally, the trial court rejected the claim of actual or apparent authority based
on the deposition testimony. Finding no evidence that Marvin Damper “handled Ms.
Damper’s healthcare business on a regular or routine basis and had permission to do so,”
the trial court concluded that Marvin Damper did not have authority to sign the
arbitration agreement on her behalf. It found that Mr. Damper could bind himself to an
arbitration agreement, but not his mother. In sum, the trial court concluded that Marvin
Damper did not have authority to sign the arbitration agreement on behalf of his mother,
and it denied the motion to compel arbitration. Quince timely filed a notice of appeal.

                                 II.    ISSUES PRESENTED

      Quince presents the following issues, which we have slightly restated, for review
on appeal:

1.     Whether the trial court erred in deciding issues related to the enforceability of the
       arbitration agreement when the Federal Arbitration Act governs the Agreement
       and the parties agreed that an arbitrator would decide all questions regarding any
       dispute related to the agreement;

2.     Whether the trial court erred in finding that Marvin Damper did not have authority
       to sign the arbitration agreement on behalf of his mother when he testified that she
       expressly authorized him to do so;

3.     Whether the trial court erred in denying Quince’s motion to compel arbitration
       when the arbitration agreement establishes that Marvin Damper had authority to
       sign the agreement on behalf of his mother; and

4.     Whether the trial court erred in finding that the power of attorney did not provide
       authority to sign the arbitration agreement.

In her posture as appellee, Plaintiff asks this Court to affirm the trial court’s decision
denying the motion to compel arbitration. The second named defendant, Dr. Jain, argues
that if this Court reverses the trial court and compels arbitration, he should maintain his
right to a jury trial because he was not a party to any arbitration agreement.

        For the following reasons, we reverse the decision of the circuit court and remand
for further proceedings.

                              III.     STANDARD OF REVIEW

        “When the facts are not disputed, we review the denial of a motion to compel
arbitration de novo, with no presumption of correctness in the trial court’s decision.”
                                          -3-
Berent v. CMH Homes, Inc., 466 S.W.3d 740, 745 (Tenn. 2015).

                                     IV.   DISCUSSION

                             A.    The Role of the Trial Court

        The first issue Quince raises on appeal is “[w]hether the trial court erred in
deciding issues related to the enforceability of the Arbitration Agreement.” Quince
argues that the trial court “failed to recognize that the plain language of the Agreement
states that the Federal Arbitration Act governs the Agreement and the parties agreed that
an arbitrator would decide all questions regarding any dispute related to the Agreement.”

        The arbitration agreement stated that any disputes arising out of or in any way
related to the agreement, including its “enforceability,” would be submitted to arbitration.
It also provided that the arbitrator would apply the law of the state where the facility was
located, except that the Federal Arbitration Act, 9 U.S.C. §§ 1-16, would “exclusively
govern the enforcement” of the arbitration agreement. In its brief on appeal, Quince
argues that the trial court “declined to enforce” these provisions.

        At the outset, we find nothing in the record to suggest that the trial court was
asked to enforce this provision or that it declined to do so. In connection with its motion
to compel arbitration, Quince asked the trial court to consider matters outside the
pleadings, it submitted documents and deposition testimony for consideration, and it
asked the trial court to find that Marvin Damper was authorized to execute the arbitration
agreement on his mother’s behalf. Quince never asked the trial court to refrain from
deciding these matters so that they could be referred to arbitration. Because of its actions
in the trial court, Quince cannot now argue, for the first time on appeal, that the trial court
should not have decided the very issues on which Quince sought a ruling.

       This Court has previously held that arguments regarding the applicability of the
Federal Arbitration Act were waived by a party’s failure to raise the issue in the trial
court. See Wofford v. M.J. Edwards & Sons Funeral Home Inc., 490 S.W.3d 800, 808
n.7 (Tenn. Ct. App. 2015) (explaining that issues raised for the first time on appeal are
waived unless they question subject matter jurisdiction, and the court clearly had subject
matter jurisdiction to consider a motion to compel arbitration irrespective of whether
federal or Tennessee law determined the arbitration issue).

       In another case, we acknowledged that a party would have had a right to have a
certain matter decided by a judge, but we explained that the party waived that right by
participating in arbitration and submitting that same issue to the arbitrator without
objection. Lee Warehouse Ltd. P’ship by Warehouses, Inc. v. Jepco Constr. Co., No.
E1999-01944-COA-R3-CV, 2000 WL 760747, at *1 (Tenn. Ct. App. June 13, 2000). We
said, “A party may not take his chances in arbitration and then, if dissatisfied with the
                                          -4-
results, seek relief in the courts.” Id. The converse holds true here. Quince cannot now
complain that the trial court should not have decided the issue regarding Marvin
Damper’s authority when Quince asked the trial court to make that very determination.

       In any event, though, even if this argument had been raised, the issue of authority
is one to be decided by the court, not an arbitrator. This Court rejected the precise
argument now raised by Quince in Edwards v. Allenbrooke Nursing & Rehabilitation
Center, LLC, No. W2016-02553-COA-R3-CV, 2017 WL 4861658 (Tenn. Ct. App. Oct.
26, 2017). In that case, the defendant-nursing home argued that the trial court should not
have decided whether an individual had authority to sign an arbitration agreement on
behalf of a nursing home patient because the arbitration agreement stated that the FAA
governed the enforceability of the agreement and that an arbitrator would decide issues
regarding enforceability.2 Id. at *1-2. As we explained in Allenbrooke, “[t]he trial court
must resolve ‘any issue questioning the formation of the parties’ arbitration agreement.’”
Id. at *4 (quoting Clayton v. Davidson Contractors, LLC, No. E2013-02296-COA-R3-
CV, 2015 WL 1880973, at *6 (Tenn. Ct. App. Apr. 24, 2015)). One such “formation”
issue to be decided by the court is “the signor’s lack of authority to bind the principal.”
Id. “Compelling a party to arbitrate whether he actually agreed to arbitrate would be
‘hopelessly circular.’” Id. (quoting Clayton, 2015 WL 1880973, at *8). For a more
detailed discussion of the issue, we refer Quince to our discussion in Allenbrooke.
Despite the arbitration agreement’s provisions regarding the FAA and enforceability,
Quince is not entitled to have the issue of authority decided by an arbitrator.3

                               B.    Authority of Marvin Damper

       The next issue we address is whether the trial court erred in concluding that
Marvin Damper lacked authority to sign the arbitration agreement on behalf of his
mother. During his deposition, Marvin Damper testified that his mother knew that he
was signing the admission paperwork on her behalf. He explained that his mother could
not write because she “shook real bad” due to Parkinson’s disease, so she gave him
“permission to sign everything on her behalf.”

       “Unless limited by law or public policy, a principal ‘may empower his or her
agent to do the same acts, to make the same contracts, and to achieve the same legal
consequences as the principal would be personally empowered to do.’” Weaver v.
Deverell, No. W2011-00563-COA-R3-CV, 2011 WL 5069418, at *7 (Tenn. Ct. App.

       2
          We note that Quince’s current attorney also represented the defendant-nursing home in
Allenbrooke, and the issue presented is copied almost verbatim from that appeal. Yet, Quince’s current
brief never cites or mentions Allenbrooke.
        3
           “Tennessee law also contemplates judicial resolution of contract formation issues.”
Allenbrooke, 2017 WL 4861658, at *3 n.1 (citing Frizzell Constr. Co. v. Gatlinburg, LLC, 9 S.W.3d 79,
85 (Tenn. 1999)).

                                                -5-
Oct. 26, 2011) (quoting Tenn. Farmers Life Reassurance Co. v. Rose, 239 S.W.3d 743,
749 (Tenn. 2007)). Under the law of agency, actual authority “‘exists when the agent is
expressly authorized by the principal to act or when the actual authority to act can be
implied from the facts.’” Id. (quoting Love v. Woods, No. E2009-02385-COA-R3-CV,
2010 WL 4366072, at *6 (Tenn. Ct. App. Nov. 4, 2010)). On appeal, Plaintiff concedes
that “Mr. Damper had express authority to execute the necessary admission documents
based on his mother’s knowledge and permission to sign the documents necessary to get
her admitted to [Quince].” However, Plaintiff argues that Marvin Damper did not have
authority to execute a stand-alone arbitration agreement that was not necessary for his
mother’s admission to the facility. According to Plaintiff, “[t]he only authority Mr.
Damper had was express oral authority to sign documents required for admission and the
arbitration agreement at issue was not required for admission or healthcare services.”

        Again, we find that the issue presented has already been considered by another
panel of this Court. In Necessary v. Life Care Centers of America, Inc., No. E2006-
00453-COA-R3-CV, 2007 WL 3446636, at *1 (Tenn. Ct. App. Nov. 16, 2007), we
considered the validity of an arbitration agreement executed by a wife while signing
documents on her husband’s behalf to have him admitted to a nursing facility. The wife
“had her husband’s oral express authority to sign all paperwork necessary for his
admission to the facility.” Id. Still, the wife argued that “this express authority did not
include the power to enter into an arbitration agreement on her husband’s behalf.” Id.
The wife admitted that she “had his authority to sign admitting documents so that he
could get the required treatment” but said she never specifically asked him about
submitting claims to arbitration or waiving his right to a jury trial. Id. at *3. The
arbitration agreement she signed was a “stand-alone” document that was “voluntary” and
“not a precondition to receiving medical treatment.” Id. at *1-2. The trial court agreed
with the wife and refused to enforce the arbitration agreement, but this Court vacated and
remanded for further proceedings. Id.

       On appeal, we noted that an analogous argument was rejected by the Tennessee
Supreme Court in Owens v. National Health Corporation, 263 S.W.3d 876 (Tenn. 2007),
when a plaintiff argued that a power of attorney authorized an attorney-in-fact to make
healthcare decisions but not “legal” decisions like an arbitration agreement. The
Supreme Court explained:

                    The plaintiff’s argument on this issue is faulty in at
             least one other respect. Her purported distinction between
             making a legal decision and a health care decision fails to
             appreciate that signing a contract for health care services,
             even one without an arbitration provision, is itself a “legal
             decision.” The implication of the plaintiff's argument is that
             the attorney-in-fact may make one “legal decision,”
             contracting for health care services for the principal, but not
                                          -6-
               another, agreeing in the contract to binding arbitration. That
               result would be untenable. Each provision of a contract
               signed by an attorney-in-fact could be subject to question as
               to whether the provision constitutes an authorized “health
               care decision” or an unauthorized “legal decision.” Holding
               that an attorney-in-fact can make some “legal decisions” but
               not others would introduce an element of uncertainty into
               health care contracts signed by attorneys-in-fact that likely
               would have negative effects on their principals. Such a
               holding could make it more difficult to obtain health care
               services for the principal. And in some cases, an attorney-in-
               fact’s apparent lack of authority to sign an arbitration
               agreement on behalf of the principal presumably could result
               in the principal being unable to obtain needed health care
               services. For example, a mentally incapacitated principal
               could be caught in “legal limbo.” The principal would not
               have the capacity to enter into a contract, and the attorney-in-
               fact would not be authorized to do so. Such a result would
               defeat the very purpose of a durable power of attorney for
               health care.

Id. (quoting Owens, 263 S.W.3d at 885). In Necessary, this Court acknowledged that we
were considering an express grant of authority rather than a written power of attorney,
but we nevertheless found the “rationale and holding of Owens” dispositive of the appeal.
Id. at *5. We explained that the wife was essentially arguing that “she had express
authority from the Decedent, who was competent to give her that authority, to sign all of
the admission documents and make all of the decisions regarding his admission to [the]
facility--except one: she did not have his authority to sign an arbitration agreement, even
though he did not withhold such authority.” Id. Accepting such an argument would
result in the type of untenable situation discussed in Owens. Id. As a result, we held that
“Plaintiff, who had the Decedent’s express authority to sign the admission documents at
the healthcare facility, also had the authority to sign the arbitration agreement on the
Decedent’s behalf as one of those admission documents.” Id.

      We discern no reason to depart from the holding in Necessary.4 Its reasoning was
followed by this Court in Bockelman v. GGNSC Gallatin Brandywood LLC, No. M2014-

       4
          Plaintiff asks this Court to follow the reasoning of Farmer v. South Parkway Associates, L.P.,
No. W2012-02322-COA-R3-CV, 2013 WL 5424653 (Tenn. Ct. App. Sept. 25, 2013), rather than
Necessary, claiming that Farmer is more “factually similar.” We disagree because Farmer did not
involve a grant of express actual authority. See id. at *5 (“Because the parties concede that no express
actual authority to execute the document exists, we turn to the remaining agency theories to determine
whether Massey had either implied actual authority or apparent authority to execute the arbitration
agreement.”)
                                                 -7-
02371-COA-R3-CV, 2015 WL 5564885, at *6 (Tenn. Ct. App. Sept. 18, 2015) perm.
app. denied (Tenn. Jan. 20, 2016), when considering the scope of one’s power as a health
care agent. We explained that even though the arbitration agreement at issue was not
required for admission, it was nevertheless “part of the admission process,” and we
declined to draw a distinction between a health care decision and a legal decision in the
nursing home admission process. Id. This avoided “the ‘untenable’ result that agents can
make some nursing home admission decisions for their principals, but not others.” Id.
(quoting Owens, 263 S.W.3d at 884-85).

       Because Plaintiff concedes that “Mr. Damper had express authority to sign the
‘admission paperwork,’” we conclude that Marvin Damper also had authority to execute
the arbitration agreement that was presented in connection with the admission process.
Thus, we reverse the trial court’s order denying the motion to compel arbitration for lack
of authority and remand for further proceedings consistent with this opinion.

                                               C.     Dr. Jain

        Finally, we note that Dr. Jain raises an issue on appeal regarding whether he is
entitled to a jury trial. As the trial court has not made any ruling regarding Dr. Jain for
this Court to review, we decline to venture into the arguments he raises on appeal. This
is an appeal from an order denying Quince’s motion to compel arbitration of the claims
Plaintiff asserted against it. Quince’s motion did not specifically mention Dr. Jain, and
the record before us does not contain any response to the motion filed by Dr. Jain.
According to Dr. Jain’s brief on appeal, he “did not take a position at the trial court level
in opposition to or in favor of compelling arbitration between Quince . . . and the
Plaintiff.” Dr. Jain’s attorney was present at the hearing in the trial court but stated that
he had nothing to add to the discussion unless the trial judge granted the motion. When
the trial judge orally ruled in favor of Plaintiff, Dr. Jain’s counsel confirmed that he had
nothing to say.5

       Our holding on appeal is simply that Ms. Damper was bound by the arbitration
agreement signed by her son on her behalf, and we reverse the trial court’s holding to the
contrary. The fact that Plaintiff has asserted related tort claims against a co-defendant
does not affect the agreement between Plaintiff and Quince to arbitrate those claims
against Quince. See Dale Supply Co. v. York Int’l Corp., No. M2002-01408-COA-R3-
CV, 2003 WL 22309461, at *8 (Tenn. Ct. App. Oct. 9, 2003). We decline to rule on any
additional issues, raised for the first time on appeal, regarding Dr. Jain.

                                          V.        CONCLUSION

        5
            Earlier in the hearing, counsel for Quince stated, “Dr. Jain is not a party to the arbitration
agreement. Dr. Jain is not a party to any of the admissions documentation. That’s all separate and apart. .
. . This is a separate contract that was entered into between Mr. Damper and the Quince facility.”
                                                     -8-
       For the aforementioned reasons, the decision of the circuit court is hereby reversed
and remanded for further proceedings consistent with this opinion. Specifically, we
remand for entry of an order compelling arbitration of Plaintiff’s claims against Quince,
and the litigation with respect to Quince is stayed pending arbitration.6 Costs of this
appeal are taxed to the appellee, Donna Felecia Watson, for which execution may issue if
necessary.

                                                         _________________________________
                                                         CARMA DENNIS MCGEE, JUDGE

       6
           Tennessee Code Annotated section 29-5-303(d) provides,

       Any action or proceeding involving an issue subject to arbitration shall be stayed if an
       order for arbitration or an application therefor has been made under this section or, if the
       issue is severable, the stay may be with respect thereto only. When the application is
       made in such action or proceeding, the order for arbitration shall include such stay.
                                                  -9-