Court Opinion

ID: 9963844
Source: CourtListenerOpinion
Date Created: 2024-04-26 14:05:25.979506+00
Date Added: 2024-06-11T08:25:02.711509
License: Public Domain

RENDERED: APRIL 19, 2024; 10:00 A.M.
                    TO BE PUBLISHED

           Commonwealth of Kentucky
                  Court of Appeals
                     NO. 2023-CA-0099-MR

LP LOUISVILLE LYNN WAY, LLC
D/B/A SIGNATURE HEALTHCARE
AT JEFFERSON MANOR REHAB &
WELLNESS CENTER; AMY BROWN,
NAMED IN HER CAPACITY AS
ADMINISTRATOR OF SIGNATURE
HEALTHCARE AT JEFFERSON
MANOR REHAB AND WELLNESS;
ASBR HOLDINGS, LLC; JJLA, LLC;
LAS PALMAS SNF, LLC; LP
MANAGER, LLC; LPMM, INC.;
LPSNF, LLC; SHC KY HOLDINGS,
LLC; SHC LP HOLDINGS, LLC;
SIGNATURE HEALTHCARE
CLINICAL CONSULTING
SERVICES, LLC; SIGNATURE
HEALTHCARE CONSULTING
SERVICES, LLC; SIGNATURE
HEALTHCARE, LLC; AND
STAKEHOLDER PAYROLL
SERVICES, LLC                                       APPELLANTS

           APPEAL FROM JEFFERSON CIRCUIT COURT
v.         HONORABLE A. C. MCKAY CHAUVIN, JUDGE
                   ACTION NO. 22-CI-001542

ALBERT RAY WOFORD, AS THE
EXECUTOR OF THE ESTATE OF
BETTY ANN WOFORD; IRA
SMEDRA; JACOB WINTNER; NEW
JEFFERSON MANOR REALTY, LLC;
THE ARBA GROUP, INC.; AND
WHEATEN, LLC                                                            APPELLEES

                                    OPINION
                               AFFIRMING IN PART,
                               REVERSING IN PART,
                                AND REMANDING

                                    ** ** ** ** **

BEFORE: ACREE, KAREM, AND LAMBERT, JUDGES.

LAMBERT, JUDGE: Appellants, collectively referred to as “Signature” herein,

appeal from the Jefferson Circuit Court’s December 28, 2022, order denying their

motion to compel arbitration and stay the proceedings. After careful review of the

briefs, record, and law, we affirm in part, reverse in part, and remand for additional

proceedings.

          BACKGROUND FACTS AND PROCEDURAL HISTORY

               On February 20, 2008, Betty Woford executed a power of attorney

(“POA”), naming her son Albert Ray Woford as her attorney-in-fact. Betty’s POA

states as follows:

               I, Betty A. Woford, . . . hereby nominate, constitute and
               appoint Albert R. Woford . . . my attorney[]-in-fact, with
               full power for me and in my name and stead, to make
               contracts, leases, sell or convey any real estate or
               personal property that I may now or hereafter own, to
               receive and receipt for any money which may now or

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             hereafter be due to me, to retain and release all liens on
             real or personal property, to draw, make and reinvest my
             money for me, to institute or defend suits concerning my
             property or rights and generally to do and perform for me
             in my name all that I might do if present.

             On April 20, 2021, Betty was admitted as a resident to Signature

Healthcare at Jefferson Manor Rehab & Wellness Center. The following day, after

initialing a statement that Betty had “signed a written document allowing [him] to

make decisions for [her] (e.g., POA, health care surrogate, living will)” and that a

copy was provided to the facility, Albert signed a voluntary “AGREEMENT TO

INFORMALLY RESOLVE AND ARBITRATE ALL DISPUTES.” The signature

line was entitled “Resident’s Authorized Representative/ Individual* Signature,”

and, directly below, “*Representative understands and agrees s/he is signing in

both representative and individual capacities and that this agreement binds

Representative, as well as Resident.”

             On March 30, 2022, Albert, as the executor of Betty’s estate, initiated

the underlying suit against Signature alleging wrongful death and multiple claims

of negligence. Importantly, while Kentucky Revised Statutes (“KRS”) 411.130

mandates that wrongful death claims shall be filed by the personal representative

of the deceased, the deceased’s beneficiaries are the real parties in interest. Ping v.

Beverly Enters., Inc., 376 S.W.3d 581, 597-600 (Ky. 2012).

                                          -3-
                Signature moved the court to stay the proceedings and compel

arbitration on the estate’s negligence claims, Albert’s individual wrongful death

claim as Betty’s beneficiary, and, arguing for a modification of current Kentucky

law, any other beneficiaries’1 wrongful death claims. In support of the motion,

Signature attached copies of the signed arbitration agreement and Betty’s POA.

Albert opposed the motion, arguing that no valid arbitration agreement existed

because he lacked the authority to bind Betty or other unvested wrongful death

beneficiaries. Albert did acknowledge, however, that he “may have had the

ability” to bind his own claim.

                Finding that Betty’s POA did not authorize Albert to make health care

decisions and that the arbitration agreement was not compulsory for her admission

to Signature’s facility, the court concluded that Albert “did not have the requisite

authority under the POA to waive, where there was no reasonable necessity to do

so, his mother’s right of access to the courts.” The court accordingly denied

Signature’s motion to compel arbitration. The order did not address whether

Albert’s individual claim was subject to arbitration. This appeal followed.

                                 STANDARD OF REVIEW

                Pursuant to the Kentucky Uniform Arbitration Act (“KUAA”), KRS

417.050 et seq., and the Federal Arbitration Act (“FAA”), 9 United States Code

1
    Excepting Albert, the record contains no information concerning Betty’s possible beneficiaries.

                                                -4-
(“U.S.C.”) §§ 1 et seq., a valid pre-dispute agreement between parties to submit to

arbitration is enforceable as written. An order denying arbitration is immediately

appealable. KRS 417.220(1). We review a court’s decision on arbitration,

“according to usual appellate standards. [KRS 417.220(2).] That is, we defer to

the trial court’s factual findings, upsetting them only if clearly erroneous or if

unsupported by substantial evidence, but we review without deference the trial

court’s identification and application of legal principles.” Conseco Fin. Servicing

Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky. App. 2001).

                                          ANALYSIS

               We begin with the question of whether Betty was bound by the

arbitration agreement Albert signed. As a preliminary issue, Albert asserts that,

regardless of the fact that he was Betty’s attorney-in-fact, he did not sign the

arbitration agreement in that capacity and, therefore, Betty was not a party to the

contract. Albert asserts that Kindred Nursing Centers Limited Partnership v.

Butler, No. 2013-CA-000880-MR, 2014 WL 3722083 (Ky. App. Jul. 25, 2014),2

presenting analogous facts, supports his claim. Signature disputes Albert’s

2
  Citation to unpublished opinions is permitted by Kentucky Rule of Appellate Procedure 41 as
persuasive authority if “there is no published opinion of the Supreme Court or the Court of
Appeals that would adequately address the point of law argued by the party[.]” Because this
Court in Cambridge Place Group, LLC v. Mundy, 617 S.W.3d 838, 841 (Ky. App. 2021),
adopted the analysis of Butler under analogous facts, Albert’s citation to Butler is contrary to the
rules. However, as the result is the same, we have addressed the merits of his claim.

                                                -5-
characterization of his signing capacity and argues that Butler is neither relevant

nor controlling. We agree with Signature.

             In Butler, the issue was whether an agreement to arbitrate signed by

the principal’s attorney-in-fact was valid when he affirmatively avowed therein

that he was signing as Butler’s son, a capacity that does not encompass the

necessary authority. Id. at *4-5. A panel of this Court affirmed the holding that no

valid arbitration agreement existed, reasoning that, absent an indication of the

capacity under which a signature was executed, the parties were bound by the

capacity in which the agreement was signed. Id. at *5-6 (see also Mundy, 617

S.W.3d at 841).

             The facts in the present case are distinguishable from Butler and

Mundy, as the agreement herein dictated in clear and express terms that Albert was

signing in both representative and individual capacities and he made no affirmative

statement otherwise. Additionally, faced with an identical signature line, the

Supreme Court of Kentucky has addressed the converse argument, that the signee

was acting solely in his representative capacity, and decided that the signatory,

having reasonable notice of the terms of the contract, had likewise assented to

arbitration in his individual capacity. LP Louisville E., LLC v. Patton, 651 S.W.3d

759, 774-75 (Ky. 2020). Consequently, we conclude that Albert’s argument that

he did not sign the arbitration agreement as Betty’s representative is without merit.

                                         -6-
             We turn now to the primary issue on appeal, which is whether the

court properly concluded that no valid arbitration agreement existed. The parties

dispute which of them bore the burden of proof. As the party seeking to compel

arbitration, Signature concedes it had the initial burden of establishing a valid

agreement. Ping, 376 S.W.3d at 590. However, citing Louisville Peterbilt, Inc. v.

Cox, Signature argues that the submission of the agreement signed by Albert and

Betty’s POA authorizing him to act on her behalf satisfied its obligation and that

the burden had therefore shifted to Albert for rebuttal. 132 S.W.3d 850, 857 (Ky.

2004). Albert, however, maintains that Signature was required to prove he had

actual authority to execute the agreement.

             Both the KUAA and the FAA require that the existence of a valid

arbitration agreement must be established before arbitration can be compelled.

Ping, 376 S.W.3d at 590. “[T]he existence of the agreement depends on state law

rules of contract formation.” Id. For a contract to be valid and enforceable, there

must be voluntary and complete assent by parties having the capacity to contract.

Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306, 321 (Ky. 2015), rev’d in

part, vacated in part by Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 581 U.S. 246,

137 S. Ct. 1421, 197 L. Ed. 2d 806 (2017). An attorney-in-fact can assent on the

principal’s behalf only if the POA instrument confers the authority to do so. Id.

                                          -7-
Because legally effective assent is required for the arbitration agreement to be

valid, we agree with Albert that Signature bore the burden of proof.

             Regarding the court’s determination that Betty’s POA did not

authorize Albert to execute the arbitration agreement, Signature contends that the

court misapplied the holding in Ping and reached an erroneous conclusion. We

agree; however, as we are permitted to affirm for any reason in the record, Fischer

v. Fischer, 348 S.W.3d 582, 591-92 (Ky. 2011), abrogated on other grounds by

Nami Res. Co., L.L.C. v. Asher Land & Min., Ltd., 554 S.W.3d 323 (Ky. 2018), we

shall consider the merits of the parties’ arguments.

             Signature asserts that the provisions of Betty’s POA granting Albert,

as her attorney-in-fact, the unqualified authority to specifically “make contracts”

and “institute or defend suits concerning [her] property or rights[,]” as well as the

universal grant of authority to “generally do and perform . . . all that [she] might do

if present[,]” necessarily includes the power to execute the arbitration agreement.

Albert disputes this broad interpretation of his authority and argues that the circuit

court should be affirmed.

             In Ping, the Kentucky Supreme Court set forth the following guidance

on the construction of a POA:

             The scope of [authority is] left to the principal to declare,
             and generally that declaration must be express. In Rice
             [v. Floyd, 768 S.W.2d 57, 59 (Ky. 1989)], this Court
             explained that even a “comprehensive” durable power

                                          -8-
             would not be understood as implicitly authorizing all the
             decisions a guardian might make on behalf of a ward.
             Rather, we have indicated that an agent’s authority under
             a power of attorney is to be construed with reference to
             the types of transaction expressly authorized in the
             document and subject always to the agent’s duty to act
             with the “utmost good faith.” Wabner [v. Black, 7
             S.W.3d 379, 381 (Ky. 1999)]. This is consistent with
             section 37 of the Restatement (Second) of Agency, which
             provides that[:]

                   (1) Unless otherwise agreed, general expressions
                   used in authorizing an agent are limited in
                   application to acts done in connection with the act
                   or business to which the authority primarily
                   relates.

                   (2) The specific authorization of particular acts
                   tends to show that a more general authority is not
                   intended.

             . . . “Unless otherwise agreed, authority to conduct a
             transaction includes authority to do acts which are
             incidental to it, usually accompany it, or are reasonably
             necessary to accomplish it.” Restatement (Second) of
             Agency § 35 (1958). . . . [It is a] fundamental rule that a
             written agreement generally will be construed “as a
             whole, giving effect to all parts and every word in it if
             possible.” City of Louisa v. Newland, 705 S.W.2d 916,
             919 (Ky. 1986).

376 S.W.3d at 592. Applying these principles, we will address Signature’s

arguments.

             First, because the POA identifies specific acts, we must reject

Signature’s contention that Albert had unfettered authority to “generally do and

perform” as Betty herself could since it would render those provisions

                                         -9-
meaningless. Instead, we read this general expression of authority as well as

Albert’s ability to “make contracts” in the context of the type of transactions or

business to which the POA primarily relates. A review of the terms of Betty’s

POA demonstrates a primary purpose of permitting Albert to manage her property

and her financial affairs. Therefore, to be authorized, the arbitration agreement

must be incidental or reasonably necessary to accomplish those purposes, and

Kentucky courts have repeatedly held that a pre-dispute arbitration agreement

waiving the principal’s constitutional rights does not fall within this authority. Id.;

Whisman, 478 S.W.3d at 324-25; Kindred Nursing Ctrs. Ltd. P’ship v. Wellner,

533 S.W.3d 189, 194 (Ky. 2017).

             Finally, directly refuting Signature’s argument, our Supreme Court

has held that a pre-dispute arbitration contract is beyond the remit of a provision

authorizing an attorney-in-fact to institute or defend suits concerning the

principal’s property or rights. Whisman, 478 S.W.3d at 322-24; see also Wellner,

533 S.W.3d at 193. The Court explained in Whisman that, “[i]nstituting ‘suits

concerning my property rights’ is not practically or conceptually similar in any

way to making an agreement that future claims will be taken to arbitration[,]” that

the term “suits” denotes an action in a court of law which “arbitration by its very

purpose and design . . . is the antithesis of[,]” and that the agreement “was not

‘incidental’ to or ‘reasonably necessary’ to the institution or defense of a ‘suit’

                                         -10-
concerning [the principal’s] property rights.” 478 S.W.3d at 323-24. Accordingly,

the court was correct that Albert was not authorized to execute the arbitration

agreement as Betty’s representative.

               In reaching our conclusion, we have considered Signature’s argument

that reliance on Whisman and Ping is misplaced given more recent decisions.

Whisman was one of three actions that the Supreme Court of Kentucky

consolidated into a single opinion addressing an attorney-in-fact’s authority to

execute a pre-dispute arbitration agreement.3 In all three cases, the Court

concluded that the agreement was unauthorized by the relevant POA. Whisman

became final, but the Appellants in the remaining two actions, Kindred Nursing

Centers Ltd. Partnership v. Clark, No. 2013-SC-000426-I (Clark 1), and Kindred

Nursing Centers Ltd. Partnership v. Wellner, No. 2013-SC-000431-I (Wellner 1),

sought a writ and were granted certiorari. Kindred Nursing Ctrs. Ltd. P’ship v.

Clark, 581 U.S. 246, 137 S. Ct. 1421.

               On review, the United States Supreme Court concluded that

Kentucky’s adoption of the clear statement rule, requiring that the authority to

execute a pre-dispute arbitration agreement must be expressly stated in a POA,

impinged upon the supremacy of the FAA. Id. As the ruling in Clark 1 turned

exclusively on the clear statement rule, it was reversed. Id. Wellner 1 also applied

3
    No. 2013-SC-000426-I.

                                        -11-
the ill-fated rule, but the case was additionally decided on alternative grounds that

the POA was not sufficiently broad to authorize the arbitration agreement. Id. at

256, 256 S. Ct. at 1429. The United States Supreme Court held that, “[i]f that

interpretation of the document is wholly independent of the court’s clear-statement

rule, then nothing we have said disturbs it[,]” and the case was remanded for the

Supreme Court of Kentucky to make this determination. Id. On remand, citing

favorably its analysis of the Whisman POA, the Court reaffirmed its conclusion

that the Wellner POA did not authorize the pre-dispute arbitration agreement.

Wellner, 533 S.W.3d at 194. Hence, the holdings of Whisman on which we have

relied remain good law.

             Regarding Ping, Signature asserts that a panel of this Court in L.P.

Pikeville, LLC v. Smith, No. 2017-CA-000807-MR, 2018 WL 1980752 (Ky. App.

Apr. 27, 2018), “held that Ping was not controlling and rejected the contention that

the [POA] was limited to decisions about finances and property[.]” Contrary to

what Signature implies, Smith did not hold that Ping articulated an incorrect

statement of the law; rather, Smith involved readily distinguishable facts that

justified reaching a contrary result. Id. at *6-7. Ping has not been overturned, and

the Supreme Court of Kentucky has continued to cite it as authoritative. See

Patton, 651 S.W.3d at 768-71.

             As to whether Betty’s beneficiaries are compelled to arbitrate, having

                                         -12-
determined that Albert was not authorized to execute the agreement on Betty’s

behalf, it necessarily follows that he was likewise unable to bind her beneficiaries,

and Signature’s arguments pertaining thereto are moot. Thus, we affirm the

court’s denial of Signature’s motion to compel arbitration on the claims brought on

behalf of Betty and her unnamed beneficiaries.

             However, given Albert’s admission that he executed the arbitration

agreement in a non-representative capacity, we must reverse the order as it pertains

to his wrongful death claim. Although the parties have briefed whether the court

proceedings should be stayed pending arbitration on Albert’s individual claim, we

remand this determination to the circuit court.

                                  CONCLUSION

             For the foregoing reasons, the order of the Jefferson Circuit Court is

affirmed in part, reversed in part, and remanded for further proceedings consistent

with this Opinion.

             ALL CONCUR.

BRIEFS FOR APPELLANTS:                     BRIEF FOR APPELLEE ALBERT
                                           RAY WOFORD, AS THE
Kif H. Skidmore                            EXECUTOR OF THE ESTATE OF
Benjamin M. Fiechter                       BETTY ANN WOFORD:
Lexington, Kentucky
                                           Lisa E. Circeo
                                           Richard E. Circeo
                                           Lexington, Kentucky

                                        -13-