Court Opinion

ID: 4017843
Source: CourtListenerOpinion
Date Created: 2016-07-21 15:04:36.313784+00
Date Added: 2024-06-11T12:17:53.670777
License: Public Domain

FILED
                                                              Jul 21 2016, 6:02 am

                                                                  CLERK
                                                              Indiana Supreme Court
                                                                 Court of Appeals
                                                                   and Tax Court

ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
Kirk R. Jocham                                             Norris Cunningham
Doehrman Buba                                              Angela M. Fox
Indianapolis, Indiana                                      Hall, Render, Killian, Heath &
                                                           Lyman, PC
                                                           Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Maureen Maynard, as Personal                               July 21, 2016
Representative of the Estate of                            Court of Appeals Case No.
Frank Cavazos,                                             34A04-1512-CT-2153
Appellant-Plaintiff,                                       Appeal from the Howard Superior
                                                           Court
        v.                                                 The Honorable Douglas A. Tate,
                                                           Judge
Golden Living in its own                                   Trial Court Cause No.
capacity and d/b/a Golden                                  34D03-1407-CT-12
Living Center–Sycamore, et al.,
and

Anonymous, M.D., and
Anonymous Primary Care,
Interested Parties,

Appellees-Defendants

Mathias, Judge.

Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016               Page 1 of 14
[1]   Maureen Maynard (“Maynard”) as personal representative of the Estate of

      Frank Cavazos (“Cavazos”) filed a complaint in Howard Superior Court

      alleging negligence and breach of contract by GGNSC Kokomo LLC d/b/a

      Golden LivingCenter-Sycamore Village and Hendricks Regional Health d/b/a

      Golden LivingCenter-Sycamore Village (“Golden Living”). Golden Living filed

      a motion to dismiss, demand for arbitration, and motion to compel arbitration,

      which the trial court later granted after a hearing on the matter was held.

      Maynard now brings this interlocutory appeal and argues that the trial court

      erred in granting Golden Living’s motion to dismiss, demand for arbitration,

      and motion to compel arbitration.

[2]   We affirm.

                                       Facts and Procedural History

[3]   On or around July 18, 2011, Cavazos became a resident of Golden Living after

      he executed an admission agreement. The agreement states in pertinent part:

              I. Preamble

              This Admission Agreement is a legally binding contract that
              defines the rights and obligations of each person (or party) who
              signs it. Please read this Agreement carefully before you sign it. If
              you have any questions, please discuss them with LivingCenter
              staff before you sign the Agreement. You are encouraged to have
              this Agreement reviewed by your attorney, or by any other
              advisor of your choice before you sign it.

              If you are able to do so, you must sign this Agreement in order to
              be admitted to this LivingCenter. If you are not able to sign this

      Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016   Page 2 of 14
               Agreement, your Legal Representative, who has been given
               authority by you to admit you to the LivingCenter, must sign it
               on your behalf. This Agreement will become effective on the day
               you are admitted to the LivingCenter regardless of the date you
               and/or your Legal Representative signs it. You are not required
               to sign any other document as a condition of admission to the
               LivingCenter.

      Appellant’s App. p. 29.

[4]   Cavazos also signed an alternative dispute resolution agreement1 (“arbitration

      agreement”) at the same time that provides in relevant part:

               THIS AGREEMENT IS NOT A CONDITION OF
               ADMISSION TO OR CONTINUED RESIDENCE IN THE
               FACILTY.

               II. Voluntary Agreement to Participate in ADR

               The parties agree that any disputes covered by this Agreement
               (“Covered Disputes”) that may arise between them shall be
               resolved exclusively by an ADR process that shall include
               mediation and, where mediation is not successful, binding
               arbitration. The parties to this Agreement acknowledge and agree
               that upon execution by Resident, this Agreement becomes part of
               the Admission Agreement, and that the Admission Agreement
               evidences a transaction in interstate commerce governed by the
               Federal Arbitration Act. The relief available to the Parties under
               this Agreement shall not exceed that which otherwise would be

      1
       Maynard also signed the admission agreement as Cavazos’s personal representative. It is unclear why
      Maynard did not also sign the arbitration agreement at issue. Although, the record does not reflect that
      Cavazos was unable to sign either agreement on his own behalf.

      Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016                          Page 3 of 14
        available to them in a court action based on the same facts and
        legal theories under the applicable federal, state or local law.

        THE PARTIES UNDERSTAND, ACKNOWLEDGE, AND
        AGREE THAT THEY ARE SELECTING A METHOD OF
        RESOLVING DISPUTES WITHOUT RESORTING TO
        LAWSUITS OR THE COURTS, AND THAT BY
        ENTERING INTO THIS AGREEMENT, THEY ARE
        GIVING UP THEIR CONSTITUTIONAL RIGHT TO HAVE
        THEIR DISPUTES DECIDED IN A COURT OF LAW BY A
        JUDGE OR JURY, THE OPPORTUNITY TO PRESENT
        THEIR CLAIMS AS A CLASS ACTION AND/OR TO
        APPEAL ANY DECISION OR AWARD OF DAMAGES
        RESULTING FROM THE ADR PROCESS EXCEPT AS
        PROVIDED HEREIN.

        ***

        VIII. Proof of Agreement

        The Parties agree and stipulate that the original of this
        Agreement, including the signature page, may be scanned and
        stored in a computer database or similar device, and that any
        printout or other output readable by sight, the reproduction of
        which is shown accurately to to reproduce the original of this
        document, may be used for any purpose just as if it were the
        original, including proof of the content of the original writing.
        This agreement shall be binding upon the Facility when signed
        by or on behalf of the Resident, regardless of whether this
        Agreement has been signed by a Facility representative.

Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016    Page 4 of 14
              IX. Resident’s Understanding

              The Resident understands that he or she has the right to seek
              advice of legal counsel concerning this Agreement; that his or her
              signing of this Agreement is not a condition of admission to or
              residence in the Facility; that he or she may revoke this
              Agreement by sending written notice to the Facility within thirty
              (30) days of signing it; and that this Agreement, if not revoked
              within that time frame, shall remain in effect for all care and
              services rendered to the Resident at or by the Facility regardless
              of whether the Resident is subsequently discharged and
              readmitted to the Facility without renewing, ratifying, or
              acknowledging this Agreement.

      Appellant’s App. pp. 36, 38. Cavazos was given the original signed agreements,

      and Golden Living retained a copy of the signature pages for the admission

      agreement and the arbitration agreement. Cavazos later died on May 17, 2013.

[5]   On February 17, 2014, Maynard filed a complaint against Golden Living and

      others, alleging that on or around July 18, 2011, Cavazos was a resident of

      Golden Living and that it was responsible for his care. In her complaint,

      Maynard asserted that Golden Living’s skilled agents, employees, and

      representatives, while acting in their scope and agency with Golden Living,

      failed to comply with the applicable standards of care. She further stated that

      Golden Living breached its contractual duty to provide Cavazos with adequate

      medical, nursing, and custodial care along with a safe and sanitary living

      condition in a dignified and respectful manner. Maynard argued that this

      negligence and breach of contract caused Cavazos to suffer permanent injuries

      Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016   Page 5 of 14
      and disabilities, great pain, emotional distress, mental trauma, and ultimately

      death.

[6]   Golden Living filed a motion to dismiss, demand for arbitration, and motion to

      compel arbitration (“motion to compel arbitration”) on November 21, 2014,

      alleging that parties to this matter agreed to resolve any claims by binding

      arbitration pursuant to the arbitration agreement. To support its motion,

      Golden Living relied on a blank arbitration agreement with accompanying

      signature page. On February 12, 2015, Maynard filed her response to Golden

      Living’s motion to compel arbitration, alleging that Golden Living failed to

      meet its burden that an enforceable arbitration agreement existed. The trial

      court held a hearing on the motion to compel arbitration on June 9, 2015. At

      the end of the hearing, the court determined that it would not rule on the matter

      until Golden Living had an opportunity to depose its former Marketing

      Director, Joni Lott (“Lott”).

[7]   On August 5, 2015, Golden Living deposed Lott. At the deposition, Lott

      explained that she helped Cavazos with his admission into Golden Living. Lott

      presented Cavazos with the admission agreement and arbitration agreement,

      which he signed. Maynard also signed the admission agreement in Lott’s

      presence, but Lott could not recall why Maynard did not sign the arbitration

      agreement. Before Cavazos signed the arbitration agreement, Lott told him that

      he could take it home if he wanted to review the agreement further. Lott noted

      that at the time Cavazos signed the agreement, he was alert and oriented, able

      to speak to her and answer questions, and appeared to understand what she was

      Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016   Page 6 of 14
      saying.2 Appellant’s App. p. 112. After the agreements were executed, Lott gave

      Cavazos the original documents and kept the signature pages to give to the

      office based on routine procedure.

[8]   Golden Living subsequently filed its supplemental brief in support of its motion

      to compel arbitration on September 8, 2015. Maynard responded the next day

      with her supplemental response in opposition to Golden Living’s motion to

      compel arbitration. On October 26, 2015, the trial court granted Golden

      Living’s motion to compel arbitration. In its order the court concluded:

               [A]s incredulous as it was for Golden [Living] to not retain a
               copy of it’s[sic] own admission and alternative dispute resolution
               agreement, there is sufficient evidence secondary evidence in
               addition to the signature page for the court to find that there was
               an enforceable arbitration agreement.

      Appellant’s App. p. 19.

[9]   Maynard filed a motion for certification of appeal of interlocutory order on

      November 5, 2015. The trial court granted the motion seven days later. On

      December 7, 2015, Maynard filed a motion asking this court to accept

      interlocutory jurisdiction, and our court granted the motion on January 19,

      2016. This appeal now ensues.

      2
       Maynard fails to raise lack of capacity to contract as a defense in her brief. As a result, we conclude that
      Cavazos’s competence was not contested here. See infra pp. 12-13.

      Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016                            Page 7 of 14
                                               Standard of Review

[10]   Maynard argues that the trial court erred in granting Golden Living’s motion to

       compel arbitration. Written agreements to submit to arbitration are valid and

       enforceable, except where grounds exist for revocation of any contract. Ind.

       Code § 34-57-2-1(a). Arbitration is initiated by written notice by either party.

       Ind. Code § 34-57-2-2. If a party seeks arbitration, and the other party refuses to

       arbitrate, the party seeking arbitration may move a trial court to compel

       arbitration, and, where arbitration is ordered, the underlying action at the trial

       court must be stayed. Ind. Code § 34-57-2-3(a), (d).

[11]   Our review of a trial court’s order compelling arbitration is de novo. Brumley v.

       Commonwealth Bus. College Educ. Corp., 945 N.E.2d 770, 775 (Ind. Ct. App.

       2011). Both Indiana and federal law recognize a strong public policy favoring

       enforcement of arbitration agreements. Safety Nat. Cas. Co. v. Cinergy Corp., 829
N.E.2d 986, 1000 (Ind. Ct. App. 2005), trans. denied. A party seeking to compel

       arbitration must satisfy two elements. Id. First, the party must demonstrate that

       there is an enforceable agreement to arbitrate the dispute. Id. Second, the party

       must prove the disputed matter is the type of claim that the parties agreed to

       arbitrate.3 Id.

                                           Discussion and Decision

       3
        Maynard only contends that the arbitration agreement is unenforceable, so we will only address the
       argument presented before us on appeal.

       Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016                       Page 8 of 14
       A. Whether the Agreement is Enforceable

[12]   Maynard specifically contends that the arbitration agreement is ambiguous and

       therefore unenforceable because the blank agreement submitted by Golden

       Living in its motion to compel arbitration does not identify the parties to the

       agreement.

[13]   The goal of contract interpretation is to determine the intent of the parties when

       they made the agreement. Citimortgage, Inc. v. Barabas, 975 N.E. 805, 813 (Ind.

       2012), reh’g denied. “We begin with the plain language of the contract, reading it

       in context, and, whenever possible, construing it so as to render each word,

       phrase, and term meaningful, unambiguous, and harmonious with the whole.”

       Id. “[C]onstruction of the terms of a written contract is a pure question of law

       for the court, reviewed de novo.” Harrison v. Thomas, 761 N.E.2d 816, 818 (Ind.

       2002).

[14]   “A contract is ambiguous if a reasonable person would find the contract subject

       to more than one interpretation.” Barabas, 975 N.E.2d at 813. If the language is

       unambiguous, we may not look to extrinsic evidence to expand, vary, or

       explain the instrument but must determine the parties’ intent from the four

       corners of the instrument. Bd. of Commr’s of Delaware Cnty. v. Evans, 979 N.E.2d
1042, 1046 (Ind. Ct. App. 2012). However, if the language is ambiguous, we

       will construe the terms to determine and give effect to the intent of the parties

       when they entered into the contract. Barabas, 975 N.E.2d at 813.

       Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016   Page 9 of 14
[15]   Courts may properly consider all relevant evidence to resolve the ambiguity.

       Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 535 (Ind. 2006). “Extrinsic

       evidence is relating to a contract but not appearing on the face of the contract

       because it comes from other sources, such as statements between the parties or

       the circumstances surrounding the agreement. CWE Concrete Const., Inc. v. First

       Nat’l Bank, 814 N.E.2d 720, 724 (Ind. Ct. App. 2004), trans. denied. If a contract

       is ambiguous, it should be construed against the party who furnished and

       drafted the agreement. Keithley’s Auction Serv. v. Children of Jesse Wright, 579
N.E.2d 657, 659 (Ind. Ct. App. 1991).

[16]   Because Maynard asserts that the parties to the agreement were not identified

       and as such made the arbitration agreement ambiguous, we consider the

       extrinsic evidence to resolve the ambiguity. Neither Golden Living nor

       Maynard produced the original admission agreement or arbitration agreement

       during the course of these proceedings. Under Indiana Rule of Evidence 1004

       (a), an original is not required and other evidence of the content of a writing,

       recording, or photograph is admissible if all originals are lost or destroyed, and

       not by the proponent acting in bad faith.

[17]   Here, Golden Living submitted a blank copy of the admission agreement and

       the arbitration agreement along with the signature pages from both agreements.

       Appellant’s App. pp. 26-34; 36-42. Lott testified that Cavazos executed both

       agreements, while Maynard only signed the admission agreement. Appellant’s

       App. pp. 35, 50. Lott explained that after a resident signed the documents, she

       Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016   Page 10 of 14
       would make a copy of the signature pages for Golden Living and give the

       original copy to the resident.

[18]   Although the portion of the arbitration agreement identifying the parties was

       blank, the agreement was a standard form used by Golden Living in each new

       resident admission. At the bottom of the agreement on each page, the

       document was labeled, “Golden Living Centers: Alternative Dispute

       Resolution Agreement (rev. 01/10).” See Appellant’s App. pp. 43, 47. The

       signature forms submitted by Golden Living contain the same language and

       match the terms and conditions outlined in the blank arbitration agreement.

       Further, even though Cavazos and Golden Living were not listed as the

       “Resident” and “Facility” lines of the agreement, Lott’s deposition testimony

       and Maynard’s complaint establish that Cavazos and Maynard were entering

       into a contract with Golden Living, which agreed to provide certain services to

       Cavazos. It is not contested that Cavazos was a resident of the Golden Living

       facility.

[19]   Golden Living inexplicably failed to retain a copy of the arbitration agreement,

       but the trial court concluded that sufficient extrinsic evidence existed to

       conclude that an enforceable agreement exists. We agree and conclude that the

       extrinsic evidence in the record resolves the ambiguity surrounding the parties

       to the arbitration agreement. See Tender Loving Care Mgmt., Inc. v. Sherls, 14
N.E.3d 67, 73 (Ind. Ct. App. 2014). We therefore conclude that the trial court

       did not err in granting Golden Living’s motion to compel arbitration after

       determining that the arbitration agreement was enforceable.

       Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016   Page 11 of 14
       B. Whether the Arbitration Agreement is Voidable

[20]   Further, Maynard asserts that even if the arbitration agreement is enforceable, a

       defense to the contract exists because Cavazos was fraudulently induced to

       execute the agreement by Lott. Fraudulent inducement occurs when a party is

       induced through fraudulent misrepresentations to enter a contract. Brumley, 945
N.E.2d at 776. If a party’s manifestation of assent is induced either by a

       fraudulent or a material misrepresentation by the other party upon which the

       recipient is justified in relying, the contract is voidable by the recipient. Id.

       Fraudulent inducement does not prevent the formation of a contract altogether,

       but it does render the contract “voidable.” Id.

[21]   The elements of fraud are: (1) a material representation of past or existing facts

       which (2) was false, (3) was made with knowledge or reckless ignorance of its

       falsity, (4) was made with the intent to deceive, (5) was rightfully relied upon by

       the complaining party, and (6) proximately caused the injury to the

       complaining party. Tru-Cal v. Conrad Kacsik Instrument Sys., Inc., 905 N.E.2d 40,

       44-45 (Ind. Ct. App. 2009).

[22]   Here, Maynard does not argue that Lott made a false material representation of

       fact with an intent to deceive Cavazos. Rather, she argues that Lott is not an

       attorney and does not understand the legal ramifications of signing an

       alternative dispute resolution agreement. However, the record reflects that Lott

       encouraged Cavazos to take the agreement with him to review and the

       arbitration agreement conspicuously stated that signing the document was not a

       Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016     Page 12 of 14
       condition of admission and could be revoked within thirty days. Even if Lott

       misunderstood the legal ramifications of executing an arbitration agreement, as

       Maynard argues, the requisite intent required to establish fraud does not exist

       here. Therefore, we cannot conclude that fraudulent inducement is a valid

       defense to deem the arbitration agreement voidable.

[23]   We acknowledge that buried in her fraudulent inducement argument, Maynard

       notes that Lott testified that it was possible Cavazos did not understand what he

       was signing. When determining if a person has the mental capacity to enter into

       a contact, the test is whether the person was able to understand in a reasonable

       manner the nature and effect of his act on the date of the agreement. Wilcox

       Mfg. Group, Inc. v. Marketing Servs. Of Indiana, Inc., 832 N.E.2d 559, 563 (Ind. Ct.

       App. 2005). Because lack of capacity to contract is Maynard’s defense to the

       arbitration agreement, it is her burden to present evidence that Cavazos was

       incompetent to contract. However, Maynard fails to raise lack of capacity to

       contract as a defense and presents no evidence that Cavazos was incompetent

       on July 18, 2011. Therefore, Cavazos’s competence was not contested here.

[24]   Furthermore, while Maynard is designated as the personal representative of

       Cavazos’s estate, the record does not reflect that she was Cavazos’s guardian at

       the time the admission agreement was signed. It is reasonable to believe that

       Golden Living’s and Maynard’s common purpose in Maynard’s execution of

       the admission agreement was to guarantee payment for Cavazos’s nursing care

       if his estate became insolvent. As such, Maynard’s right to bring suit is

       derivative of Cavazos’s. As previously mentioned, Cavazos signed both the

       Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016   Page 13 of 14
       admission agreement and arbitration agreement, so as personal representative

       of his estate, Maynard is bound by the arbitration agreement. It was Maynard’s

       burden to present evidence that Cavazos was incompetent to contract and/or

       that she was his legal representative at the time the contracts were signed.

       Because of this failure, we conclude that in her derivative claim against Golden

       Living, she is bound by the agreements Cavazos signed as a presumed

       competent individual.

[25]   For all of these reasons, we conclude that because the arbitration agreement is

       enforceable, Maynard has failed to establish a defense that renders the

       agreement voidable, and since Maynard was not Cavazos’s legal personal

       representative at the time the admission and arbitration agreements were

       signed, the trial court did not err in granting Golden Living’s motion to compel

       arbitration.

[26]   Affirmed.

       Vaidik, C.J., and Barnes, J., concur.

       Court of Appeals of Indiana | Opinion 34A04-1512-CT-2153 | July 21, 2016   Page 14 of 14