Court Opinion

ID: 4224708
Source: CourtListenerOpinion
Date Created: 2017-11-30 15:09:29.273039+00
Date Added: 2024-06-11T14:41:51.221988
License: Public Domain

CORRECTED: NOVEMBER-22, 2017
                     \
                                             RENDERED: NOVEMBER 2, 2017
                                                        TO BE PUBLISHED

KINDRED NURSING CENTERS LIMITED                                    APPELLANTS
PARTNERSHIP D/B/A WINCHESTER .
CENTRE FOR HEALTH AND        -
REHABILITATION N/K/ A FOUNTAIN1
CIRCLE HEALTH AND REHABILITIATION;
KINDRED NURSING CENTERS EAST, LLC;
KINDRED HOSPITALS LIMITED
PARTNERSHIP; KINDRED HEALTHCARE,
INC.; AND KINDRED HEALTHCARE
OPERATING, INC.        .

         ON REMAND FROM THE UNITED STATES.SUPREME COURT
V.                         CASE NO. 16-32
              CLARK CIRCUIT COURT CASE NO. 10-CI-00472

BEVERLY WELLNER, INDIVIDUALLY AND                                    APPELLEE
ON BEHALF OF THE ESTATE OF JOE P.
WELLNER, DECEASED, AND ON BEHALF
OF THE WRONGFUL DEATH
BENEFICIARIES OF JOE P. WELLNER

              OPINION OF THE COURT BY JUSTICE VENTERS
                                                                     )

      This matter is before the Gourt on remand pursuant to the opinion of the

United States Supreme Court in Kindred Nursing Centers Ltd. Partnership v.

Clark, 137 S. Ct. 1421 (2017). The case initially came to this Court as three

separate actions which we consolidated into a single opinion styled Ex:tendicare
Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015).1 Extendicare Homes,

Inc., did not seek review by the United Stated Supreme Court, and so our

disposition of its case, No. 2013-SC-000426-1, Extendicare Homes, Inc. v.

Whisman became final. Without Extendicare Homes as a party to the United

States Supreme Court action, the case went forward with Kindred identified as

the Appellant. To avoid confusion, we refer to the final decision of this Court

as      "E~endicare'   and the decision of the United States Supreme Court as

"Kindred."
          Among other holdings,    ~xtendicare   held that an attomey-in..;fact did not

have the authority to bind his principal to a pre-dispute" arbitration· agreement

unless that authority was clearly stated in the power-of-attorney document.. In

Kindred, the Supreme Court dubbed this the "clear statement rule," and for

convenience and consistency we accept that term as a useful name. As

articulated in Ext,endicare, we set forth the clear statement rule as a more

specific application of the general rule stated in Pi.ng v. Beverly Enterprises,

Inc., 376 S.W.3d 581 (Ky. 2012).2 We said in Extendicare:
          · [Ping] caution~ ... that given the 'significant legal consequences~
           arising from an agreement waiving the principal's rights of ·access
            to the courts and to trial by jury, 'authority to make such a waiver
           is not to be inferred lightly.' Our holdings throughout this opinion,
  ··~
            as in Pi.ng itself, serve to highlight our reservation about casually
            inferring a power laden with such consequences.

       1 The three cases are: No. 2013-SC-000426-1, Extendicare Homes, Inc., v.
Whisman; No. 2013-SC-000430-1, Kindred Nursing Centers Limited Partnership v.
Clark, and No. 2013-SC-000431-1, Kindred Nursing Centers Limited Partnership v.
Wellner.
       2 Cert. denied,_. U.S._, 133 S. Ct. 1996 (2013).

                                             2
478 S.W.3d at 327    (quo~g   Pi.ng, 376 S.W.3d at 593).

       Kindred Nursing Centers challenged the "clear statement rule" by

 petitioning the United States Supreme Court for a writ of certiorari. ' The writ

 was granted and the Supreme Court ultimately concluded that our adoption of

 the clear statement rule, insofar as it affected Kindred's pre-dispute arbitration

 agreement, impinged upon the supremacy of the Federal Arbitration Act. Our

· ruling in the case of Kindred Nursing Centers Ltd. Partnership v. Clark turned

 exclusively upon the clear statement rule, and so the Supreme Court's decision

 reversed It. How~ver, otir ruling in the associated case of Kindred Nursing

 Centers Ltd. Partnership v. Wellner also rested upon alternative grounds.

 Uncertain about whether we had· incorporated the clear statement.rule into the

 alternative basis for the Wellner decision, the Supreme Court remanded that

 case for us to determine whether the   altem~te   grounds for our holding with

 r~spect   to the Wellner POA was "wholly independent" of the clear statement

 rule. The Supreme Court said:

       The Kentucky Supreme Court began its opinion by stating that the
       Wellner power of attorney was ipsufficiently broad to give Beverly
       the authority to execute an arbitration agreement for Joe. If that
       interpretation of the dKindred, 137 S. Ct. at 1429 (internal citations omitted) _(emphasis added). So,

the question that Kindred presents to us on remand is this:

                                         3
        Was our interpretation that the Wellner POA did not authorize
        attomey-in-fact Beverly Wellner to execute Kindred's pre- .
        dispute arbitration agreement wholly independent of, and not
        impermissibly tainted by, the clear statement rule?

       The Supreme Court directed on remand that we "evaluate the

 document's meaning anew" only if our o_riginal construction of the Wellner POA

was "impermissibl[y] taint[ed]" by, or not "wholly independent of," our

subsequent adoption of the "clear statement rule." It follows that if our

construction of the We~er POA was "wholly ~dependent of [the] clear-

statement rule, then nothing [in Kindred] disturbs it." Id.3

       Our ruling in Extendicare relating to Kindred's demand for arbitration of

the Wellner claim was based_ upon two.alternative grounds. First, we

concluded that neither of the two POA provisions relied upon by Kindred gave

the agent, Beverly Wellner, the authority to execute on behalf of her principal,

Joe Wellner, a pre-dispute arbitration agreement. Second, we applied the ill-

fated clear statement _rule. The Supr~me Court was "uncertain" about whether

the second alternative unduly influenced our reasoning in deciding the first

alternative.· The premise behind the Supreme Court's uncertainty seems to be

its perception that our application
                                . of the clear statement rule, rather than
                                                                      .
                                                                           the

       3   Kindred Nurs:ing Centers did not challenge our construction of the Wellner
POA beyond its criticism of the clear statement rule. K:indred's petition for a rehearing
and its petition for a writ of certiorari instead focused exclusively on the clear
statement rule, which it described as "a newly-created rule of law disfavoring
enforcement of agent-created arbitration agreements." The failure. of any party to
challenge our construction of the Wellner POA except in the special circumstance
identified by the Supreme Court precludes further de novo reconsideJ:'ation.
Accordingly, we do not review our original :interpretation of the Wellner POA ab initif?.
By the explicit terms of the Supreme Court's mandate, if our original interpretation of
the Wellner POA was wholly independent of the clear s~atement rule, then it must
stand as the final decision of this Court.
                                            4
manifestation of our profound respect for the right of access to the Court of

Justice explicitly guaranteed by the Kentucky Constitution and the right to

trial by jury designated as "sacred" b:y Section 7 of the Kentucky Constitution,

demonstrated
         .
             instead a hostility to federal policies implicit in the. Federal

Arbitration Act and aresulting aversion to any implication of authority to make

an arbitration agreement.

       So, we explain that aspect of our Extendicare decisiOn to demonstrate its

purity from the taint of anti-arbitration bias. As a frame of reference for '-

whether our interpretation of the breadth and scope of the Wellner POA was

unduly influenced :by the clear statement rule, we begin with a glance at the

Clark POA. We concluded that the universally broad and vagu~ language

employed in the Clark POA, 4 without any express reference to the waiver of the

rights of access to the courts and jury trials, nevertheless did indeed vest the

principal's attorney-in-fact with authority to execute a pre-dispute arbitration

agreement. We held that the Clark POA authorized the agent's execution of

Kindred's pre-dispute arbitration agreement despite the absence of a clear

statement to that effect; only the application of the clear statement rule avoided

that result. Obviously, nothing even close to a "clear statement" was needed in

the Clark POA to authorize the agent to waive her principal's fundamental

constitutional right of access to the courts and a jury trial. That power, we

said, would be implied from the vague and all-encompassing language of the.

Clark POA. The concern that, because of some residual influence of the clear

      4 The Clark POA granted the powers "to transact, handle, and dispose of all :
matters affecting me and/ or my estate in any possible way" and "generally to do and
perform for me in my name all that I might if present."
                                           5
                    .               .                                      .
statement rule, we are averse to inferring the authority to     exe~ute   an

arbitration agreement dissolves upon recognizing that we inferred exactly that

authority in the Clark matter. See Extendicare, 478 S.W.3d at 327.

       Turning now to our interpretation of the Wellner POA's specific language,

we note again that Kindred relied upon only two provisions of the Wellner POA

·as authority for Beverly Wellner's execution of Kindred's pre-dispute arbitration

agreement: 1) the power. "to demand, sue for, collect, re·cover and receive all

debts, monies, interest and demands whatsoever now due or that.may
                                                            .        I

hereafter be or become due to me (including the right to institute legal

proceedings therefor)"; and, 2) the power "to make, execute and deliver deeds,

releases, conveyances and contracts of every nature in relation to both real and

personal property, including stocks, bonds, and insurance." Id. at 325.5

      At this pofut it-is worth· recalling that the "act" of Wellner's agent which

required authorizing language from the POA document was riot the

enforcement, through legal proceedings or otherwise, of something then due or

to become due to Joe Wellner; nor was it :the making of a contract or

instrument pertaining to any of Joe Wellner's property. The "act" that required

authorization was signing an agreement which makes no reference at all to

Joe's property and instead pertains exclusively to his constitutional rights.

      Our construction of tbe two cited provisions of the Wellner POA issues

was dear and logical and, in opposition to the clear statement rule, expressed a

       s Whether other provisions of the Wellner POA would support Kindred's position
is beyond the scope of appellate review. ~rland v. Commonwealth, 458 S.W.3d 7~1,
785 (Ky. 2015) ("Arguments not pursued on appeal are deemed waived.").

                                         6
willingness to infer in proper cases the power to commit to arbitration evc:;n

where that express authority was lacking. With respect to the powers to

"demand, sue for; collect, recover and receive all ... demands whatsoever" and

"to institute legal proceedings," it should be noted that our Welmer analysis

incorporated by direct reference our ~alysis of the similar language of the

Whisman POA. We said without reservation that "the power to 'institute or

defend suits concerning my property rights' would    necess~y    encompass the
                                                                                   )

power to make litigation-related decisions within the context of a suit so

instituted, including the decision to submit the pending dispute to mediation or

arbitration." Id. at 323 (emphasis added). Despite the lack of a clear statement

· authorizing the waiver of the principal's fundamental rights of access to the

·courts and to a jury trial, we expressly held that _the power to bind existing

claims to arbitration would be inferred from the "institute suits" provision of

the Wellner POA. Far from being tainted by an association with the clear

statement rule, that holding is antithetical to the clear statement rule.

       The distinction we made with respect to the pre-dispute arbitration

agreement was not based at all on any aversion to an implied, rather than an

express, power to waive constitutional rights. Beverly Wellner did not execute

Kindred's optional free standing pre-dispute arbitration agreement within the

context of a lawsuit or claim for the recovery of anything belonging to Joe

Wellner. The act that required supporti.i:ig authorization was.her execution of

the pre-dispute arbitration agreement in ~e context of admitting him to a

                                         7
nursing home. 6 That act was in no way connected to the pursuit of any claim

of Joe's. Rather than an insistence upon a clear statement, we rejected

Kindred's argument simply because the act of executing a pre-dis'put~

arbitration agreement upon admission to a nursing home had nothing at all to

do with "demand[ing], su[ing] for, collect[ing], recover[ing] and receiv[ing] all . ..

demands whatsoever" and "institut[ing] legal proceedings," and even settling

existing claims by arbitration or litigation. Id. at 325.

      As to our construction of the power to make contracts "in relation to both

real and personal property," we explicitly recognized that "a personal injury

claim is a chose-in-action, and therefore constitutes personal property." Id. at

325-326. Notwithstanding the absence of a clear statement auth.orizing

arbitration, we straightforwardly held that the power to make contracts relating.

to personal property authorizes the agent to arbitrate the principal's pers9nal

injuzy claim. Here, too, our disagreement with Kindred has nothing to do with

the concept of the clear statement rule that the authority to waive the

constitutional rights of another person must be clearly stated. Rather than any

reliance upon the clear statement rule, our decision with respect to this

provision of the POA was based exclusively upon the clear fact that Kindred's

pre-dispute arbitration contract did not relate to any property rights of Joe

Wellner. It did not buy, sell, give, trade, alter, repair, destroy, divide, or

otherwise affect or dispose of in any way any of Joe Wellner's personal

property. By executing Kindred's pre-dispute arbitration agreement, Beverly

       6 We note that Kindred's optional pre-dispute arbitration agreement was a
completely free-standing instrument, fully independent of and not conditioned upon
the separate nursing home admission contracts. See Extendicare, 478 S.W.3d at 318.
                                          8
                                   /

 did not "make, execute and deliver deeds, releases, conveyances and contracts

 of [any] nature in relation to [Joe's] property." The only "thing"- of Joe Wellner's

 affected by the pre-dispute arbitration agreement was his constitutional rights,

 which no one contends to be his real or personal property. Id.

       Not a sciritilla of our original analysis ·of the Wellner POA -rested upon the

 premise that the authority to waive constitutional rights (or the corresponding

 authority to arbitrate a claim) must be clearly stated. Moreover, our analysis

 clearly expressed the opposite--that whenever reasonably consistent with the

 principal's expressed grant of authority, we would infer without a clear _

 statement the power to bind him to an arbitration agreement. Kindred's

 agreement
     .
           failed, not because the'Wellnet POA lacked a·\ clear statement
                                       .

                I
 referencing the authority to waive Joe's fundamental constitutional rights; it

 failed because, by its own specific terins it was not executed in relation to any

 of Joe Wellner's property, and it was not a document pertaining to the

 enforcement of a,ny of Joe's existing claims.

       As established by the rationale plainly stated in Extendicare, our
                                                            I

 conclusion that the Wellner POA was insufficient to vest Beverly Wellner with
                                                                     I

 the power to execute a pre-dispute arbitration agreement as part of Joe
                                           '       '

 Wellner's admission to a nursing home was wholly independent of the clear

· statement rule decried. by the United States Supreme Court. Therefore, as

 stated by the United States Supreme Court, that aspect of the Extendicare

 decision remains undisturbed.
       All sitting. Cunningham, Keller, and Wnght, JJ., concur. Hughes, J.,

dissents by separate opinion in which, Minton, C.J., and VanMeter, J., join.

                                               9
        HUGHES, J., DISSENTING: I respectfully dissent because I believe that

 the majority has failed to follow the United States Supreme Court's directive in

 the penultimate paragraph of its decision forcefully reversing the original

 majority opinion in this case. That d,irective states:

         The Kentucky Supreme Court began its opinion by stating that the
         Wellner power of attorney was insufficiently broad to give Beverly
         the authority to execute an arbitration agreementfor Joe. See
         supra, at 3. If that interpretation of the document is· wholly
         independent of the court's clear-statement rule, then nothing we
         have said disturbs it. But if that rule at all influenced the
         construction of the Wellner power of attorney, then the court must
       · evaluate the document's meaning anew. The court's opinion leaves
         us uncertain as to whether such an impennissible taint occurred.
         We therefore vacate the judgment below and return the case to the
         state court for further consideration. See Mann.et Health Care
         Center, Inc. v. Brown, 565 U.S. 530, 534 (2012) (per curiam)
         (vacating and rem~ding another arbitration decision because we
         could not tell "to what degree [an] alternative holding was
         influenced by" the state court's erroneous;arbitration-specific
         rule). On remand, the court should determine whether it adheres,
        in the absence of its clear-statement rule, to its prior reading of the
         Wellner power of attorney.                               ·             ·

 Kindred Nursing Ctrs, Ltd Partnership v. Clark, 581 U.S. __, 137-S. Ct. 1421,

· .1429 (2017) (emphasis s:upplied). Prior to i&suing this directive, the Supreme~ .

 Court noted that this Court had "flouted the rfAA's command to place

 [arbitration] agreements on an equal footing with all other contracts." Id. This

 Court's distinction between pre-dispute arbitration agreements as not

 pertaining to a principal's property rights but rather only his constitutional

 jmy right vis-a-vis post-dispute (or. perhaps active dispute) arbitration

 agreements, which they concede necessarily affect property rights, is simply

 another attempt to single out arbitration for "hostile" treatment under the guise

 of KentuckY contract and agency law.

                                          10
      An arbitration agreement, regardless of when signed or whetjier

characterized as pre- or post-dispute, has ·absolutely no reason to exist unless

there is a .current or potential claim to be pursued or defended against. If there

is never a claim, the agreement has no purpose-it just sits there as an

executed document/contract clause of no real consequence. An arbitration

agreement, whether freestanding or part of a broader contract, derives its

entire meaning from the fact that the signatories may have or do have a

dispute and they agree on the forum for disposing of that claim, whenever it

arises. Indeed, the first sentence of the arbitration agreement at issue

("Arbitration Agreement") states:

      Any and all claims or controversies a.dsing out of or i,n any way
      relating to this ADR Agreement ("Agreement") or the Resident's stay
      at the Facility including disputes regarding interpretation of this
      Agreement, whether arising out of State or Federal law,' whether
      existing or arising in the future, whether for statutory,
      compensatory or punitive damages and whether sounding in
      breach of contract, tort or breach of statutory duties (including,
      without limitation, any claim based on violation of nghts,
      negligence medic.al malpractice, any other departure from the
      accepted standards of health care or safety or the Code of Federal
      Regulations or unpaid nursing home charges), irrespective of the
      basis for the duty or of the legal theories upon which the claim is
      asserted, shall be submitted to alternative dispute resolution as
      described in this Agreement.                        ·

The subjects of this first sentence are plainly "claims and controversies."

      The particular provision of the Wellner POA that, in my view, authorizes

the agent to sign an arbitration agreement, even pre-dispute, is the power "to

make execute and deliver deeds, releases, conveyances and contracts of every
    '                                                .
nature in relation to both real and personal property, including stocks, bonds,

and insurance." In the original opinion of this Court ("Extendicarej, the

majority noted that property in Kentucky has been broadly con~trued to

                                       11
 include things that are tangible and i:qtangible, visible or invisible, "real or

 personal, choses in action as well as in possession, everything which has an

 exchangeable value, or which goes to make up one's wealth or estate." 4 78
 S.W.3d at 326 (emphasis in original) citing Commonwealth v. Kentucky

 Distilleries & Warehouse Co., 136 S.W.1032, 1037 (Ky. 1911). The Court

 acknowledged that a personal injucy claim is a chose-in-action and therefore

 constitutes personal property. Id. at 325-26 citing Button v. Drake, 302 Ky.

 517, 195 S.W.2d 66, 69 (1946). The majority then reasoned that, nonetheless,

 a pre-dispute arbitration agreement is not about property rights but rather
                           '
 constitutional rights.

       Joe's personal injucy claim was personal property and Beverly had
       the authority to make contracts relating to it. But the Kindred pre-
       dispute arbitration agreement was not a contract made "in
       relation" to a property claim. The agreement did nothing to affect
       any of Joe's property or his property rights. The arbitration
       agreement does not even purport to be a "contract ... in relation
       to both real and personal property." As clearly expressed within
       the agreement.itself, the agreement was made in relation to Joe's
       c~nstitutional right to access the courts and to trial by juiy.
       Constitutional rights are decisively not "personal property" as we ,
       have defined the term. They are not "money, goods,_ chattels,      ·
       things in action, and evidences of debt;" nor do they have "an
       exchangeable value, or which goes to make up one's wealth or
       estate."

 (Footnote omitted). Id.

       But, of course, an arbitration agreement is about property rights because

 without a claim regarding such ri$hts it has no meaning or purpose. See the

 first sentence of the Arbitration Agreement quoted supra. The majority's view

 of arbitration as contraiy to the "sacred" right to a juiy trial (a point which it

 continues to emphasize in the current majority) clearly underlies its willingness

' to divorce an arbitration agreement from the   r~ality   of what it is and what it

                                          12
does. An arbitration agreement is plainly a contract "in relation to . . . personal

property."
                                                        \

       The current majority opinion attempts to show its "purity from the taint

of anti-arbitration bias" by noting that the Clark POA had "vague and all-

encompassing language" and, consequently, the Extendicare·majority

concluded that Clark's agent was vested with authority to execute even a pre-

dispute arbitration agreement. So, a power "to transact, handle and dispose of

all matters affectlp.g me and/or my estate in any possible way" and "generally

to do and perform for me in my name all that I might if present" is sufficient.

But under the former and current majority's view a broad power "to make ...

contracts of every nature in relation to both real and personal property" is
                                                        (
insufficient. This is the exact language from the Wellner POA and so is the

following:

       I hereby further grant unto my Attorney-in-Fact full power in and
       concerning the above premises and to do any and all acts as set·
       forth above as fully as I could do· if I were· personally present, and
       at my decease to pay, transfer and deliver over to my personal
       representative, all principal and income then in his possession and
       control, and I do ratify and confirm whatever my said. Attomey-in-
       Fact shall lawfully do under these presents, provided however, that
       my attorney shall not bind me as surety, guarantor for
       accommodation nor give away any of my estate, whatsoever, nor
       shall my attorney be authorized to accept service of process for or
       on my behalf....

478 S.W.3d at 319-20. 7

       The only response offered to this language, language.that is both specific

as to contracts of every nature affecting property and broad as to general

       1 To state the obvious, it would be very difficult for an agent to discern the
limits on his or her authority that today's majority readopts and restates.
                                            13
powers, is the unfounded premise that an arbitration agreement is .not. about

property rights, just the waiver of a constitutional right. Given how that

premise ignores the reality of what an arbitration agreement is, why fr exists

and what it relates to, I firmly believe the analysis of the Wellner POA is

impermissibly tainted by the same anti-arbitration bias as the so-called "clear

statement rule."

       Addressing the clear statement rule' in Kindred Nursing Centers, 137 S.

Ct. 1427, the U.S. Supreme Court held that it was "too tailor-made to

arbitration agreements ... to survive the FAA's edict against singling out those

contracts for disfavored treatment." Justice Kagan noted wryly that the

Kentucky Constitution protects property rights     ~d   speech rights but no one

was suggesting that the "broader" constitutional rule adopted by the

Eictendicare majority would realistically apply to prevent an agent from selling

her principal's furniture or signing a non-disclosure agreement unless those

particular constitutioni:tl rights were addressed ~xpressly in the POA. Id. The

ensuing short passage deserves careful consideration:

      [T]he [Kentucky Supreme] court hypothesized a slim set of both
      patently objectionable and utterly fandful :contracts that would be
      subject to its rule: No longer could a representative lacking explicit
      authorization waive her "principal's right to worship freely" or
      "consent to an arranged marriage" or "bind [her] principal to
      personal servitude." Placing arbitration agreements within that
      class reveal~.the kind of "hostility to arbitration" that led Congress.
      to enact the FAA. And.doing so only makes clear the arbitration-
      specific character of the rule, much as if it were made applicable to
      arbitration agreements and blackswans.                               ,

Id. at 1427-28 (citations and footnote omitted). In my view, today's holding

returns to black swan territory by a different route. 'J;'he narrow focus on the

constitutional ju:ry right to the exclusion of the reality of an arbitration

                                         14
agreement returns us to the realm of "utterly fanciful contracts" where .
                                        I

arbitration agreements exist in a vacu~m independent of disputes and property

rights.

      Arbitration has received its fair share of criticism and some of it is fully

justified but adopting the majority's artificial distinctions regarding language in

POAs is a dangerous way to combat the perceived dangers of arbitration. ·What
                                                (

happens after the issuance of this majority opinion in the following everyday

scenarios?

      An aging principal let it be known that he did not want to leave· his home

of forty years, a multi-level residence that cannot accommodate his current

needs. His daughter, as agent under his POA, wants to enter into a

construction contract to make the needed modifications so he can stay in his

home but all the local contractors' construction contracts have arbitration

clauses. Can she sign such an agreement with a pre-dispute arbitration

clause? If she does and a dispute arises with the contractor, is the arbitration

clause enforceable by either party to the contract? If the arbitration clause is

not enforceable, does it invalidate the
                                      .
                                        entire construction
                                                     .
                                                            contract? The

daughter is also looking for around-the-clock care, including the provision
                                                                       .,
                                                                            of

meals, for her .father. All the local in-home care agencies require a signed

contract. Those contracts also have arbitration clauses. --Can she execute one
                                            l       ~
and, if she does, what happens if there is a disp:ute as to billing or quality of

cate? These contracts, for construction and in-home care, were signed pre-
                      ;

dispute and under the majority's view the arbitration clauses were never about

property rights but rather solely constitutional rights not covered by the power

                                            15
     to "make ... contracts of every nature in relation to both real and· personal

     property." So, what happens?

           Another principal is a shareholder in a closely-held, third generation

     family business. She, her siblings and several cousins own all the stock. Her

     son is agent under her POA and, due to her incapacity, he has been

     approached by his aunt and uncle (his mother's     ~ister   and brother) about

~    signing. a voting and buy-sell agreement with them and one of. the cousins.

     They are worried about the direction t:Wo out-of-state shareholders (also the

     principal's cousins) seem to be charting and they know if they vote together

    · and agree to offer ¢.eir stock to each other if and when they decide to sell, the

     company can stay on the track earlier generations intended. Can the son sign

     the agreement if it contains an arbitration clause requiring the signatories to

     arbitrate any disputes among themselves as to, say, the value of the stock? If

     he does sign, is it at all enforceable? Suppose everyone looks the other way at

     the legality and they proceed to ar:t>itration. After the principal's death, can the

     executor challenge the son's actions and the arbitration award as not

     authorized?

           These scenarios are not even the more likely instances where confusion

    will occur from the majority's holding. The principal's homeowner's insurance

     policy needs to be renewed. The principal rents an apartment and her lease is

     due for renewal. The principal has few assets but unexpectedly receives a

     sizeable inheritance, so the agent wants to open an account with a conservative

    . stock brokerage company. All these contracts have arbitration clauses. If the

    agents execute them, are the contracts themselves invalid or just the

    arbitration   ~lause?   Perhaps the majority would conclude that none of these
                                             16
pose a problem because the arbitration clause is embedded in a."contract in

relation to" either real or personal property. If that's the case, are only

freestanding. pre-dispute arbitration agreements verboten under the         POA~    And

why is that? The freestanding     arbitra~on    agreement, liked the embedded

clause, has no purpose other than to identify the forum for the parties to settle

disputes .about prop~rty interests. It is a "contract ... in relation to . . .

personal property. "B

       Additionally, the majority places great emphasis on "pre-dispute" as

indicative of the fact that an arbitratie>n agreement such as the one at issue

here is only about constitutional rights. In their view, the "futureness" of the

dispute between the parties means that the agreement is not about property at

all, just the jury trial right under Section 7 of the Kentucky Constitution. Aside

from the repeatedly noted fact about the very, indeed. only, reason for an

arbitration agreement, where does the emphasis on the futureness of

somethin~   lead? When a principal, such as Mr. Wellner, gives his agent

authority under a POA to collect debts, that authority manifestly includes

future debts owed him by others, such as        a tenant's rental payment or a form.er
employer's final payments under an employment contract or pursuant to a

pension plan. The authority to make "contracts of every nature in relation to

       s Again, in our original Extendicare opinion, the majority aclmowledged that a
personal injuiy claim is a chose in action and therefore personal property. 478
S.W.3d at 326. The dissent noted that a chose in action is defined "generally as '[a]
proprietary right in personam, such as a debt owed by another person, a share in a
joint-stock company, or a claim for damages in tort' and also as 'the right to bring an.
action to recover a debt, money or thing."' 478 S.W.3d at 348, citing BLACK'S LAW
DICTIONARY, 275 (9th ed. 2009).                        .

                                           17
                                              .      .

    both real and personal property" includes future property of the principal

~   whether a stock dividend, a check for· a property insurance claim, an

    unexpected inheritance or a run-of-the mill refund in a consumer class action.

    All these future thing~. are encompassed by the POA because that is the nature
                                      .                                     .
    of the instrument, i.e., to deal with the principal's affairs in the manner stated

    whether or not a particular thing, event, type of property was in existence or

    even envisioned at the time of the execution of the POA. The majority's

    position would presumably respect
                                 .
                                      the agent's authority
                                                      .
                                                            in all these future

    matters.but not the future matter of a potential legal claim (a chose in action

    an.d therefore personal property) and whether or not to agree to arbitration.

          Finally, recent emphasis on .arbitration, and its increasing prevalence in

    various facets of everyday life, has heightened the bar's awareness of the need

    to consider carefully what the principal wishes to authorize tl?.e agent to do on

    that score. Many attorneys now inquire whether the principal wishes for his or

    her agent to agree .to arbitr~tion, and the POA so states that preference. Going

    forward, I believe we can expect more clarity in POA ~nstruments regarding the

    specific preferences of the principal, and that is obviously a desirable result..

    However,. as for the many POAs that are currently in existence we must take

    them as we find them and construe them in a straightforward manner, not

    through a lens that disfavors arbitration in violation of the Supremacy Clause

    and not with artificial distinctions that cannot-withstand scrutiny.

          Because the majority's construction of the Wellner POA was and is

    dearly affected, "impermissibl[y] taint[ed]," 137 S. Ct. at 1429; by the same

    negative view of arbitration that underlay its clear statement rule, we should

    acknowledge that fact. We must "evaluate the document's meaning anew" and
                                        18
      ~

determine not to   ~adhere   ... to [the] prior reading of the Wellner power of

attorney." Id. For these reasons, I respectfully and strongly dissent.
      Minton, C.J.; and VanMeter, J., join.

·coUNSEL FOR APPELLANTS:

Donald Lee Miller II
Kristin M. Lomond
James Peter Cas~idy III
Quintairos, Prieto, Wood & Boyer P.A.

COUNSEL FOR APPELLEE:

James T. Gilbert
Coy, Gilbert, Shepherd & Wilson

· Richard Eric Circeo
  Robert Earl Salyer
  Wilkes & McHugh, P.A.

                                    ·'

                                          19
                                     20 l 3-SC-000431-1

 KINDRED NURSING CENTERS LIMITED                                              APPELLANTS
 PARTNERSHIP D /Bf A WINCHESTER
 CENTRE FOR HEALTH AND
 REHABILITATION N/K/ A FOUNTAIN
 CIRCLE HEALTH AND REHABILITIATION;
 KINDRED NURSING CENTERS EAST, LLC;
 KINDRED HOSPITALS LIMITED
 PARTNERSHIP; KINDRED HEALTHCARE,
 INC.; AND KINDRED HEALTHCARE
 OPERATING, INC.

           ON REMAND FROM THE UNITED STATES SUPREME COURT
 V.                          CASE NO. 16-32
                CLARK CIRCUIT COURT CASE NO. 10-CI-00472

BEVERLY WELLNE~, INDIVIDUALLYAND                                                 APPELLEE
ON BEHALF OF THE ESTATE OF JOE P.
WELLN~R, DECEASED, AND ON BEHALF
OF THE WRONGFUL DEATH
BENEFICIARIES OF JOE P. WELLNER

                                           ORDER

        The Opinion of the Court rendered November 2, 2017, is corrected on its face by

. substitution of the attached opinion in lieu of the original opinion. Said correction does

not affect the hp1ding of the original Opinion of the Court.

        ENTERED:· November --2.f_; 2017

                                                 F JUSTICE JOHN D. MINTON,