Court Opinion

ID: 3176789
Source: CourtListenerOpinion
Date Created: 2016-02-11 17:27:32.37254+00
Date Added: 2024-06-11T14:07:44.894824
License: Public Domain

[Cite as Scott v. Kindred Transitional Care & Rehab., 2016-Ohio-495.]

                 Court of Appeals of Ohio
                               EIGHTH APPELLATE DISTRICT
                                  COUNTY OF CUYAHOGA

                              JOURNAL ENTRY AND OPINION
                                      No. 103256

        JOYCE THRASHER SCOTT, ADMINISTRATOR

                                                           PLAINTIFF-APPELLEE

                                                     vs.

                KINDRED TRANSITIONAL CARE AND
                    REHABILITATION, ET AL.
                                                           DEFENDANTS-APPELLANTS

                                           JUDGMENT:
                                            AFFIRMED

                                     Civil Appeal from the
                            Cuyahoga County Court of Common Pleas
                                   Case No. CV-13-816565

        BEFORE: McCormack, J., Kilbane, P.J., and S. Gallagher, J.

        RELEASED AND JOURNALIZED:                          February 11, 2016
ATTORNEYS FOR APPELLANT

Paul W. McCartney
Bonezzi, Switzer, Polito & Hupp Co., L.P.A.
312 Walnut Street
Suite 2530
Cincinnati, OH 45202

Jennifer R. Becker
Bonezzi, Switzer, Polito & Hupp Co., L.P.A.
1300 E. 9th Street
Suite 1950
Cleveland, OH 44114

ATTORNEYS FOR APPELLEES

Christopher M. Mellino
Meghan C. Lewallen
Margo Moore
The Mellino Law Firm L.L.C.
19704 Center Ridge Rd.
Rocky River, OH 44116
TIM McCORMACK, J.:

       {¶1} Doris Thrasher (“Doris Thrasher” hereafter) was admitted into Kindred

Transitional Care and Rehabilitation-Stratford (“appellant” hereafter) for physical

rehabilitative care following a fall and hospitalization.         Among the bundle of papers

signed by her daughter Joanne Thrasher at the time of admission was an arbitration

agreement.     The arbitration agreement was not a condition for Doris Thrasher’s

admission to the facility.1

       {¶2} Doris Thrasher died while in appellant’s care.                    Subsequently, the

administrator of her estate (“appellee” hereafter) 2 filed a lawsuit against appellant,

claiming negligence and wrongful death.

       {¶3} Appellant filed a motion to stay proceedings and compel arbitration.               The

trial court denied the motion. This appeal followed. Appellant raises one assignment

of error, arguing the trial court erred in denying its motion to stay proceedings and compel

arbitration.

       {¶4} Arbitration is strongly favored as a method to settle disputes. Williams v.

Aetna Fin. Co., 83 Ohio St. 3d 464, 700 N.E.2d 859 (1998). Ohio courts recognize a

presumption for arbitration when the claim in dispute falls within the scope of the

        Section K of the arbitration agreement states: “the execution of this Agreement is not a
       1

precondition of admission * * * .”

          The complaint was filed by John K. O’Toole, administrator of the estate of Doris Thrasher.
       2

Plaintiff later substituted Joyce Thrasher Scott for John K. O’Toole.
arbitration provision.   Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St. 3d 352,

2008-Ohio-938, 884 N.E.2d 12, ¶ 27.         However, because arbitration is a matter of

contract, before a party can be bound by the terms of an arbitration agreement, there must

be an agreement that explicitly requires the arbitration of the parties’ dispute. AT&T

Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 648-649, 106 S. Ct.
1415, 89 L. Ed. 2d 648 (1986). Generally, a trial court’s decision to grant a stay pending

arbitration is reviewed under an abuse of discretion standard.   We also keep in mind that

the validity of an arbitration agreement involves a mixed question of law and fact. Corl

v. Thomas & King, 10th Dist. Franklin No. 05AP-1128, 2006-Ohio-2956, ¶ 10.

       {¶5} Here, it is undisputed that mother Doris Thrasher did not execute the

arbitration agreement herself. On appeal, appellant makes two arguments.         Appellant

argues that Doris Thrasher’s daughter Joanne had actual authority to bind Doris Thrasher

because she signed the arbitration agreement as Doris Thrasher’s power of attorney.

Appellant argues that, in the alternative, Doris Thrasher’s daughter also had apparent

authority to bind Doris Thrasher under agency law.

Actual Authority

       {¶6} “The relationship of principal and agent, and the resultant liability of the

principal for the acts of the agent, may be created by the express grant of authority by the

principal.” Master Consol. Corp. v. BancOhio Natl. Bank, 61 Ohio St. 3d 570, 574, 575
N.E.2d 817 (1991). “Express authority is that authority which isdirectly granted to or

conferred upon the agent or employee in express terms by the principal, and it extends
only to such powers as the principal gives the agent in direct terms * * *.” (Citation

omitted.) Master Consol. at 574.

       {¶7} In arguing Doris Thrasher’s daughter had actual authority to enter into the

arbitration agreement, appellant points us to the following language above Doris

Thrasher’s daughter’s signature in the arbitration agreement:       “If signed by a Legal

Representative, the representative certifies that the Facility may reasonably rely upon the

validity and authority of the representative’s signature based upon actual, implied or

apparent authority to execute this Agreement as granted by the resident.”    Next to Doris

Thrasher’s daughter’s signature was a handwritten abbreviation of “P.O.A.”       Appellant

argues that, because of this language, Doris Thrasher’s daughter had actual authority to

sign the arbitration agreement on behalf of Doris Thrasher as her agent.             In her

deposition, Doris Thrasher’s daughter was asked about her signing the arbitration

agreement as her mother’s P.O.A.     She testified that she did not even recall getting the

document; no one reviewed the document with her before she signed it; and she did not

understand that she was binding her mother to the terms of the document.

       {¶8}   “A power of attorney is a written instrument authorizing an agent to

perform specific acts on behalf of his principal.” Testa v. Roberts, 44 Ohio App. 3d 161,

164, 542 N.E.2d 654 (6th Dist.1988). As required by R.C. 1337.25, a power of attorney

must be signed by the principal (or, in the principal’s conscious presence by another

individual directed by the principal to sign the principal’s name on the power of attorney).

 It is undisputed Doris Thrasher did not grant a power of attorney to her daughter in the
manner required under R.C. 1337.25.        As such, Doris Thrasher’s daughter was not

expressly authorized to act on Doris Thrasher’s behalf.      Her daughter’s signature and

notation of “P.O.A.” had no legal effect in the absence of a statutorily valid power of

attorney signed by Doris Thrasher.

       {¶9} In a similar case, Templeman v. Kindred Healthcare, Inc., 8th Dist.

Cuyahoga No. 99618, 2013-Ohio-3738, this court found the power of attorney invalid

because the power of attorney form did not contain the principal’s signature, as required

by the statute.   This court observed that defendant Kindred Healthcare was “conversant

with both the usages and the nature of the businesses of providing rehabilitative nursing

health care and compelling alternative dispute resolutions,” and must have been aware of

the requirement of a valid power attorney. Id. at ¶ 24.

       {¶10} In the present case, there was not even a document purporting to be a power

of attorney. Appellant points to the “certification” language above Doris Thrasher’s

daughter’s signature to show she acted as her mother’s power of attorney.               The

daughter’s “certification” that she had authority as power of attorney to enter into an

arbitration agreement on her mother’s behalf cannot vest her with actual authority in the

absence of a statutorily valid power of attorney.

Apparent Authority

       {¶11} On appeal, appellant raises for the first time the argument that, even if Doris

Thrasher’s daughter was without actual authority to enter into the arbitration agreement,

she had apparent authority to do so.
       {¶12} We first note that appellant based its argument before the trial court

exclusively on Doris Thrasher’s daughter’s signature on the arbitration agreement as

Doris Thrasher’s power of attorney. Appellant made no argument regarding apparent

authority before the trial court.   We are precluded to hear a claim raised for the first time

on appeal.       Jacubenta v. Cadillac Ranch, 8th Dist. Cuyahoga No. 98750,

2013-Ohio-586, ¶ 18. Even if appellant had not waived this argument, we find the claim

to be without merit.

       {¶13} We recognize that, where one who is assuming to act as an agent for a party

in the making of a contract but in fact has no actual authority to do so, such party will

nonetheless be bound by the contract “‘if such party has by his words or conduct,

reasonably interpreted, caused the other party to the contract to believe that the one

assuming to act as agent had the necessary authority to make the contract.’” Master

Consol., 61 Ohio St. 3d at 576, 575 N.E.2d 817, quoting Miller v. Wick Bldg. Co., 154
Ohio St. 93, 93 N.E.2d 467 (1950). Stated differently, where “a person of ordinary

prudence, conversant with business usages, and the nature of the particular business is

justified in assuming that an agent is authorized to perform on behalf of his principal a

particular act, the principal is estopped from denying the agent’s authority to perform it.”

(Citation omitted.) Id.

       {¶14} For a principal to be bound by the acts of his agent under the theory of

apparent agency, however, evidence must affirmatively show:

       (1) that the principal held the agent out to the public as possessing sufficient
       authority to embrace the particular act in question, or knowingly permitted
       him to act as having such authority, and (2) that the person dealing with the
       agent knew of those facts and acting in good faith had reason to believe and
       did believe that the agent possessed the necessary authority.

Master Consol. at syllabus.   Furthermore, under an apparent-authority analysis, it is the

acts of the principal, not those of the agent’s, that create apparent authority. Id. “The

principal is responsible for the agent’s acts only when the principal has clothed the agent

with apparent authority and not when the agent’s own conduct has created the apparent

authority.” Ohio State Bar Assn. v. Martin, 118 Ohio St. 3d 119, 2008-Ohio-1809, 886
N.E.2d 827, ¶ 41, citing Master Consol. at 576-577.

       {¶15} Furthermore, the burden of proving that apparent authority exists rests upon

the party asserting the agency. Irving Leasing Corp. v. M&H Tire Co., 16 Ohio App. 3d
191, 475 N.E.2d 127 (2d Dist.1984). Therefore, in this case it is appellant’s burden to

establish that Doris Thrasher’s daughter had apparent authority to enter into the

arbitration agreement on Doris Thrasher’s behalf.

       {¶16} This court was confronted with a similar fact pattern in Lang               v.

Beachwood Pointe Care Ctr., 8th Dist. Cuyahoga No. 100109, 2014-Ohio-1238, ¶ 6,

appealnot accepted, 140 Ohio St. 3d 1415, 2014-Ohio-3785, 15 N.E.3d 884. This court

held that a nursing home resident did not cloak her stepdaughter with the requisite

apparent authority to bind her to the arbitration agreement, even though her stepdaughter

signed all the paperwork as part of the admission process.

       {¶17} Similarly here, appellant fails to demonstrate either of the two prongs

required under an apparent-authority analysis. The record shows that Doris Thrasher’s
daughter handled the paperwork to have her mother admitted. Appellee points to evidence

showing that Doris Thrasher was alert, cognizant, and cooperative at admission.

Appellant, on the other hand, alleges Doris Thrasher suffered from dementia at the time.

Whether Doris Thrasher was competent or not, there is no evidence showing she held her

daughter out as possessing sufficient authority to bind her to an arbitration agreement that

she knew nothing about and the existence of which was not a precondition for admission

into appellant’s facility. See Lang at ¶ 6, citing Licata v. GGNSC Malden Dexter L.L.C.,

466 Mass. 793, 802, 2 N.E.3d 840 (2014). Appellant has not demonstrated the first

prong of the apparent-authority analysis.

       {¶18} Under the second prong, appellant fails to prove that it, acting in good faith,

had reason to believe Doris Thrasher’s daughter possessed the necessary authority to bind

Doris Thrasher to a matter unrelated to the admission process. Appellant’s inserting

“certification” clause above the signature line on the arbitration agreement and ensuring

that Doris Thrasher’s daughter signed her name as “P.O.A.” — without explaining the

import of the certification — does not reflect that appellant had a good faith belief that

Doris Thrasher’s daughter possessed the necessary authority to bind Doris Thrasher to the

arbitration agreement.   It reflects the opposite.

       {¶19} As this court held in Lang, 8th Dist. Cuyahoga No. 100109,

2014-Ohio-1238, and as the Fourth District held in Primmer v. Healthcare Indus. Corp.,

4th Dist. Athens No. 14CA29, 2015-Ohio-4104, ¶ 26, the mere fact that a family member

signed other documents as part of the admission process did not cloak the family member
with the requisite apparent authority to bind the person admitted to a facility to an

arbitration agreement that he or she knew nothing about.          Here, Doris Thrasher’s

daughter’s authority was determined by the daughter’s acts alone.     There is nothing in

the record to indicate Doris Thrasher did anything affirmatively to clothe her daughter

with apparent authority to enter into the arbitration agreement. Appellant’s reliance on

Doris Thrasher’s daughter’s acts in signing all admission documents was misplaced

because a claim of apparent authority cannot be based on the purported agent’s acts.

          {¶20} Appellant cites Brown v. Extendicare, Inc., 2015-Ohio-3059, 39 N.E.3d 896

(2d Dist.), to support its claim that Doris Thrasher’s daughter had apparent authority to

enter into the arbitration agreement. Brown is fundamentally distinguishable. In that

case, there were two separate admissions of the resident.      In the first admission, the

resident’s daughter signed an admission agreement as the resident’s legal representative

for healthcare and financial decisions.     In the second admission, the resident herself

signed the admission agreement, which also contained a designation of her daughter as

her legal representative for healthcare and financial decisions.         Based on these

circumstances, the Second District held that the resident herself clothed her daughter with

the appearance of authority and knowingly permitted her daughter to act as agent on her

behalf.

          {¶21} In the present case, Doris Thrasher’s name, no one else, was listed as the

sole financial agent in the admission paperwork.      She at no time had ever signed any

document designating her daughter as her representative.      There is otherwise no other
evidence showing she knowingly permitted her daughter to act with authority in matters

beyond her admission into the facility. Brown is factually distinguishable.

       {¶22} Based on the foregoing analysis, we conclude the trial court did not err in

finding the language relative to a purported arbitration agreement was not binding on

Doris Thrasher and denying appellant’s motion to stay proceedings and compel

arbitration.

       {¶23} Judgment affirmed.

       It is ordered that appellee recover of appellant costs herein taxed.

       The court finds there were reasonable grounds for this appeal.

       It is ordered that a special mandate issue out of this court directing the common

pleas court to carry this judgment into execution.

       A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

______________________________________________
TIM McCORMACK, JUDGE

MARY EILEEN KILBANE, P.J., and
SEAN C. GALLAGHER, J., CONCUR