Court Opinion

ID: 4389427
Source: CourtListenerOpinion
Date Created: 2019-04-22 18:55:03.58979+00
Date Added: 2024-06-11T14:23:04.312453
License: Public Domain

J-A04041-19

                                2019 PA Super 122

    CHALENA MCILWAIN, AS            :            IN THE SUPERIOR COURT OF
    ADMINISTRATRIX OF THE ESTATE OF :                 PENNSYLVANIA
    NORMAN JAMES FRANKS             :
                                    :
                   Appellant        :
                                    :
                                    :
              v.                    :
                                    :            No. 2060 EDA 2018
                                    :
    SABER HEALTHCARE GROUP, INC.,   :
    LLC; SABER MANAGEMENT INC.;     :
    HEALTHCARE HOLDINGS, LLC;       :
    AMBLER HEALTHCARE GROUP, LLC;   :
    KAREN PULINI (AS TO AMBLER      :
    EXTENDED CARE CENTER)           :

                 Appeal from the Order Entered March 6, 2018
     In the Court of Common Pleas of Montgomery County Civil Division at
                             No(s): 2017-19910

BEFORE:     LAZARUS, J., KUNSELMAN, J., and COLINS*, J.

OPINION BY COLINS, J.:                                     FILED APRIL 22, 2019

       Appellant, Chalena McIlwain (McIlwain), as Administratrix of the estate

of Norman James Franks (Franks), appeals from the order entered on March

6, 2018, sustaining the preliminary objections of Appellees, Saber Healthcare

Group, Inc., LLC, Saber Management Inc., Healthcare Holdings, LLC, Ambler

Healthcare Group, LLC, and Karen Pulini (collectively, Saber) as to survival

claims brought by McIlwain concerning the death of Franks, her father. We

reverse the trial court’s sustaining of Saber’s preliminary objections and

remand for further proceedings in the trial court.

       Franks suffered from a diagnosis of schizophrenia and dementia. The

Superior    Court   of   California   granted   McIlwain    letters   of   temporary

*    Retired Senior Judge assigned to the Superior Court.
J-A04041-19

conservatorship of Franks’ person and estate on May 9, 2013. The temporary

conservatorship was set to expire on July 31, 2013. On May 13, 2013, Franks

entered Saber nursing home in Pennsylvania.          McIlwain signed Franks’

admission papers in the space designated “Authorized Representative,” and

the box next to “Conservator” was checked. See Saber Sur-Sur Reply, Ex. E.

There is an asterisk next to “Conservator,” leading to a statement “copy of

legal documents must be provided to Facility.” Id. The document was also

signed by a “Facility Representative.”   Id.   Additionally, McIlwain signed a

“Resident and Facility Arbitration Agreement,” which provided, in part, that

the parties to the agreement would submit to arbitration if there was a

dispute. Prelim. Objs. Ex. B. McIlwain signed the arbitration agreement in

the same way she signed the admission paperwork.         Id.   The arbitration

agreement stated, in capital letters and bold typeface “Not a Condition Of

Admission” at the top of the document. Id. Due to Franks’ severe cognitive

defects, he was incapable of making decisions on his own. See Saber Sur-

Sur-Reply Brief and Answer at 3; see also Saber Sur-Sur-Reply, Ex. G (noting

Franks’ admission diagnosis of paranoid schizophrenia and advanced vascular

dementia).

     On July 30, 2013, the Court of Common Pleas of Montgomery County,

Orphans’ Court Division, appointed McIlwain as permanent guardian for

Franks. On July 31, 2013, the letters of temporary conservatorship from the

Superior Court of California expired. Franks was a resident at Saber from May

13, 2013 until September 18, 2016. During his stay at Saber, Franks suffered

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multiple falls and urinary tract infections. Franks died on October 24, 2016

after falling and hitting his head while living at Saber.

        On August 7, 2017, McIlwain filed a complaint against Saber alleging

negligence, wrongful death and survival claims.         Saber filed preliminary

objections arguing that the dispute was subject to binding arbitration and

attached the arbitration agreement McIlwain signed on behalf of Franks.

McIlwain filed a response alleging that Saber did not produce any evidence

that McIlwain had the authority to sign that agreement. Saber filed a sur-

reply attaching a copy of the letters of temporary conservatorship from the

Superior Court of California. McIlwain filed a sur-reply arguing that there is

no evidence the conservatorship was transferred to Pennsylvania pursuant to

the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act

(UAGPPJA)1 and therefore, the conservatorship was not valid in Pennsylvania.

Saber filed a sur-sur-reply alleging that the conservatorship was valid, in part

because of the Full Faith and Credit clause of the United States Constitution.2

        On March 6, 2018, the trial court filed the order in question, sustaining

Saber’s preliminary objections as to the survival claims. The trial court found

that McIlwain had the authority to bind Franks to the arbitration agreement,

and, therefore, bifurcated the survival claims and sent them to arbitration.

The trial court overruled Saber’s remaining preliminary objections pertaining

____________________________________________

1   20 Pa.C.S. §§ 5901-5992.

2   U.S. Const. Art. IV, § 1.

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to the wrongful death and negligence claims. As to the wrongful death claims,

the trial court determined that McIlwain did not agree to arbitrate her own

claims against Saber. See TCO at 9-10. The arbitration agreement covered

claims “between the parties” and McIlwain was not a party to the agreement.

Id.

       McIlwain filed a motion with the trial court to amend the March 6, 2018

interlocutory order to include the language set forth in 42 Pa.C.S. § 702(b) to

allow for an immediate appeal. The trial court did not enter a ruling on the

motion, and the motion was deemed denied on May 5, 2018. See Pa.R.A.P.

1311(b). In response, McIlwain filed a petition for review with this Court on

June 1, 2018.3 On July 23, 2018, this Court granted the petition for review.

The Order directed that the matter should proceed before the Superior Court

as an appeal, at 2060 EDA 2018, from the trial court’s order dated March 6,

2018.4

       On appeal, McIlwain raises the following question for review:

       1. Did the trial court err in finding that Chalena McIlwain had
          sufficient legal authority in Pennsylvania to enter into an
          arbitration agreement on behalf of her father, Norman James
          Franks?

Appellant’s Brief at 3-4.

____________________________________________

3McIlwain filed another petition for review on June 6, 2018, given the docket
number 75 EDM 2018. This petition appears to be duplicative of McIlwain’s
earlier petition and it was, therefore, denied on July 19, 2018.

4We note that our Order states “March 8, 2018” but that is a typographical
error.

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      Our review of a challenge to a trial court’s decision to grant preliminary

objections is guided by the following standard:      “[w]e will reverse a trial

court’s decision to sustain preliminary objections only if the trial court has

committed an error of law or an abuse of discretion.” American Express

Bank, FSB v. Martin, 200 A.3d 87, 93 (Pa. Super. 2018). “When considering

preliminary objections, all material facts set forth in the challenged pleadings

are admitted as true, as well as all inferences reasonably deducible

therefrom.”   Feingold v. Hendrzak, 15 A.3d 937, 941 (Pa. Super. 2011)

(citation omitted).

      At the outset, Saber contends that because McIlwain was appointed

temporary conservator of Franks’ person and estate in California a few days

before signing the arbitration agreement, she had the authority to sign this

agreement in Pennsylvania on behalf of Franks.        The California letters of

temporary conservatorship provided the following:

      The Temporary Conservator has been granted the following
      powers under Probate Code Sections 2590, which powers are
      necessary for the protection of the Conservatee and his estate:
      The power to contract for the guardianship or conservatorship and
      to perform outstanding contracts and thereby bind the estate…the
      power to…arbitrate, or otherwise adjust claims, debts, or demands
      upon the guardianship or conservatorship.

See Saber Sur-Reply, Ex. E. We look to the statutes governing guardianships

and conservatorships to determine if the California temporary conservatorship

gave McIlwain the authority to sign the arbitration agreement in Pennsylvania.

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       In 2007, the National Conference of Commissioners on Uniform State

Laws drafted the Uniform Adult Guardianship and Protective Proceedings

Jurisdiction Act (Uniform Act) to specifically address jurisdiction and related

issues in adult guardianship and protective proceedings, including problems

relating to transferring a guardianship from one state to another and

recognition of an out-of-state guardianship/conservatorship order.             See

Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (2007)

at 1-2.5 In the prefatory note, the Uniform Act states,

       [b]ecause the United States has 50 plus guardianship systems,
       problems of determining jurisdiction are frequent. . . . There is a
       need for an effective mechanism for resolving multi-jurisdictional
       disputes. Article 2 of the [Uniform Act] is intended to provide such
       a mechanism. . . . [F]ew states have streamlined procedures for
       transferring a proceeding to another state or for accepting such a
       transfer. . . . Article 3 of the [Uniform Act] is designed to provide
       an expedited process for making such transfers, thereby avoiding
       the need to relitigate incapacity and whether the guardian or
       conservator appointed in the first state was an appropriate
       selection. . . . Sometimes, guardianship or protective proceedings
       must be initiated in a second state because of the refusal of
       financial institutions, care facilities, and courts to recognize a
       guardianship or protective order issued in another state. Article
       4 of the [Uniform Act] creates a registration procedure. Following
       registration of the guardianship or protective order in the second
       state, the guardian may exercise in the second state all powers
       authorized in the original state’s order of appointment . . . .

____________________________________________

5https://www.uniformlaws.org/HigherLogic/System/DownloadDocumentFile.

ashx?DocumentFileKey=dc4d38fd-7d13-4d14-053c-
7160a2c1a9c3&forceDialog=0 (last visited March 29, 2019).

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Id. As of March 2019, 49 of the US states and territories have enacted a

version of the Uniform Act, including both Pennsylvania and California.6

       Pennsylvania enacted its version in 2012 known as the UAGPPJA. 20

Pa.C.S. § 5901. “The Act applies only to court jurisdiction and related topics

for adults for whom the appointment of a guardian or conservator or other

protective order is being sought or has been issued.”7 Id. California enacted

its version of the Uniform Act, the California Conservatorship Jurisdiction Act

(California Act), in 2016.      Ca. Probate Code §§ 1980-2033.          Likewise, the

California Act “applies only to court jurisdiction and related topics for adults

for whom the appointment of a [conservator] is being sought or has been

issued.”8 Ca. Probate Code § 1980.

       The     UAGPPJA        provides         two   ways   that   an    out-of-state

guardianship/conservatorship can be recognized in Pennsylvania.              Section

5922 provides for a transfer of the jurisdiction of the guardianship from

____________________________________________

6https://my.uniformlaws.org/committees/community-

home?CommunityKey=0f25ccb8-43ce-4df5-a856-e6585698197 (last visited
March 18, 2019).

7 Conservator is defined in the UAGPPJA as a “person appointed by the court
to administer the property of an adult.” A guardian is defined as “a person
appointed by the court to make decisions regarding the person of an adult.”
20 Pa.C.S. § 5902 (emphasis added).

8 In California a conservatorship pertains to adults, and guardianships pertain
to minors. See Ca. Probate Code §§ 1500-1502.

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another state into Pennsylvania.9 Section 5931 provides for an out-of-state

guardian/conservator to register its guardianship/conservatorship order in

Pennsylvania.10 In this case, McIlwain did not follow either procedure.11

____________________________________________

9   “To confirm transfer of a guardianship or conservatorship transferred to
this Commonwealth . . . the guardian or conservator must petition the court
in this Commonwealth to accept the guardianship or conservatorship. The
petition must include a certified copy of the other state’s provisional order of
transfer.” 20 Pa.C.S. § 5922(a).

10    If a guardian has been appointed in another state and a petition
      for the appointment of a guardian is not pending in this
      Commonwealth, the guardian appointed in the other state, after
      giving notice to the appointing court of an intent to register, may
      register the guardianship order in this Commonwealth by filing as
      a foreign judgment in a court, in any appropriate judicial district
      of this Commonwealth, certified copies of the order and letters of
      office. . . . Upon registration of a guardianship or protective order
      from another state, the guardian or conservator may exercise in
      this Commonwealth all powers authorized in the order of
      appointment except as prohibited under the laws of this
      Commonwealth, including maintaining actions and proceedings in
      this Commonwealth and, if the guardian or conservator is not a
      resident of this Commonwealth, subject to any conditions imposed
      upon nonresident parties.

20 Pa.C.S. § 5931, 5933(a).

11   Registration    appears    to    apply    when   the   subject    of   a
guardianship/conservatorship stays in the home state, but the
guardian/conservator      needs      to     act    on    behalf     of    the
guardianship/conservatorship in another state. See Uniform Act, p.33.
Transfer appears to apply in the case where a guardian/conservator wishes to
transfer the jurisdiction of the guardianship/conservatorship to a different
state. See Uniform Act, p.28. Because McIlwain did not attempt to register
or transfer the temporary conservatorship prior to her signing of the
arbitration agreement, we do not need to resolve the proper mechanism that
should have been followed in this case.

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      While Saber produced a copy of the letters of temporary conservatorship

from California, Saber has not alleged, nor is there any basis to conclude

based on the proceedings below that McIlwain petitioned the court in California

to transfer the conservatorship.      In fact, McIlwain states, in her brief,

“[d]efendants produced no evidence, nor is Plaintiff aware of the existence of

any such evidence, that any petition was filed to accept the California

proceedings or that it was properly registered in Pennsylvania pursuant to §

5933.”     Appellant’s brief at 15.         The   authority   of the   temporary

conservatorship issued in California emanated from the Superior Court of

California. As McIlwain did not follow either of the procedures outlined in the

UAGPPJA, the temporary conservatorship granted in California did not give

McIlwain the authority to sign the arbitration agreement on behalf of Franks.

The Full Faith and Credit clause of the United States Constitution is not

offended, because the underlying judgment of incapacity is not disturbed upon

following the procedures provided in the UAGPPJA. See 20 Pa.C.S. § 5922(g);

see also § 5933(a).

      Next, we determine whether, nonetheless, there exists an agency

relationship between McIlwain and Franks that would provide an independent

authority for McIlwain to have executed the arbitration agreement on behalf

of Franks. “It is black letter law that in order to form an enforceable contract,

there must be an offer, acceptance, consideration, or mutual meeting of the

minds.”   Walton v. Johnson, 66 A.3d 782, 786 n.3 (Pa. Super. 2013)

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(citation omitted). “As contract interpretation is a question of law, our review

of the trial court’s decision is de novo and our scope is plenary.” Cardinal v.

Kindred Healthcare, Inc., 155 A.3d 46, 50 (Pa. Super. 2017) (citation

omitted).

      “Agency is the relationship which results from the consent of one person

that another may act on his behalf.” Lincoln Avenue Industrial Park v.

Norley, 677 A.2d 1219, 1222 (Pa. Super. 1996) (citation omitted).          “The

creation of an agency relationship requires no special formalities.” Walton,

66 A.3d at 787 (citation omitted). “The existence of an agency relationship is

a question of fact.”   Id.   “The party asserting the existence of an agency

relationship bears the burden of proving it by a fair preponderance of the

evidence.” Id.

      An agency relationship may be created by any of the following:
      (1) express authority, (2) implied authority, (3) apparent
      authority, and/or (4) authority by estoppel. Express authority
      exists where the principal deliberately and specifically grants
      authority to the agent as to certain matters. Implied authority
      exists in situations where the agent’s actions are “proper, usual
      and necessary” to carry out express agency. Apparent authority
      exists where the principal, by word or conduct, causes people
      with whom the alleged agent deals to believe that the principal
      has granted the agent authority to act. Authority by estoppel
      occurs when the principal fails to take reasonable steps to
      disavow the third party of their belief that the purported agent
      was authorized to act on behalf of the principal.

Walton, 66 A.3d at 786 (citations omitted) (emphasis added).

      We find no agency relationship existed between Franks and McIlwain

giving McIlwain the authority to sign the arbitration agreement on behalf of

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Franks. “The basic elements of agency are the manifestation by the principal

that the agent shall act for him, the agent’s acceptance of the undertaking

and the understanding of the parties that the principal is to be in control of

the undertaking.” Walton, 66 A.3d at 787 (citation omitted). It is clear that

there was no express, implied, or apparent authority, nor authority by

estoppel to establish an agency relationship between McIlwain and Franks in

relation to signing the arbitration agreement.       Authority for an agency

relationship emanates from the words and actions of the principal, here,

Franks. Saber has not alleged Franks was present when McIlwain signed the

arbitration agreement or gave express consent to McIlwain to sign the

agreement on his behalf. In fact, Saber states that due to Franks’ severe

cognitive defects, he was incapable of making decisions on his own.        See

Saber Sur-Sur-Reply Brief and Answer at 3; see also Saber Sur-Sur-Reply,

Ex. G (noting Franks’ admission diagnosis of paranoid schizophrenia and

advanced vascular dementia).

      Saber alleges that McIlwain, by her words and conduct, held herself out

as Franks’ agent and Saber was justified in relying on her words and conduct.

Specifically, Saber alleges that because McIlwain signed the admission

agreement,    consent    for   physician     care,   and   authorization   and

acknowledgement of receipt on behalf of Franks, she had apparent authority

to sign the arbitration agreement. However, an agent cannot simply, by her

own words, invest herself with apparent authority. Turnway Corp. v. Soffer,

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336 A.2d 871, 876 (Pa. 1975); see also V-Tech Services, Inc. v. Street,

72 A.3d 270, 279 (Pa. Super. 2013). Such authority emanates from the action

of the principal and not the agent.    Turnway, 336 A.2d at 876; V-Tech

Services, 72 A.3d at 279. As it is clear that Saber did not rely on the words

or conduct of Franks, no apparent authority exists. Additionally, we do not

assume agency by a mere showing that one person does an act for another.

Walton, 66 A.3d at 787. “Agency cannot be inferred from mere relationships

or family ties.” Wisler v. Manor Care of Lancaster PA, LLC, 124 A.3d 317,

323 (Pa. Super. 2015) (citation omitted).

      Saber did not allege it was misled by any words or conduct of Franks.

A party who deals with an agent must “take notice of the nature and extent

of the authority conferred.” Wisler, 124 A.3d at 324 (finding that son with

valid power of attorney did not have authority to sign arbitration agreement

on behalf of resident where nursing home did not ascertain the nature and

extent of son’s purported authority). “Parties are bound at their own peril to

notice limitations upon the grant of authority before them, whether such

limitations are prescribed by the grant’s own terms or by construction of law.”

Id. “If a person dealing with an agent has notice that the agent’s authority is

created or described in a writing which is intended for his inspection, he is

affected by limitations upon the authority contained in the writing, unless

misled by conduct of the principal.” Id. Saber had the duty to confirm the

extent of McIlwain’s purported authority to sign the arbitration agreement as

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Franks’ agent at the time of reliance. Saber neglected to do so at its own

peril.

         “The FAA . . . does not require parties to arbitrate when they have not

agreed to do so.” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 293 (2002)

(citation omitted). “Despite national and state policies favoring arbitration, a

party cannot be compelled to arbitrate in the absence of a valid agreement to

do so under either Pennsylvania law or the [FAA].” Washburn v. Northern

Health Facilities, Inc., 121 A.3d 1008, 1015-6 (Pa. Super. 2015) (citation

omitted). “The [FAA] requires courts to place arbitration agreements on equal

footing with all other contracts.”        Kindred Nursing Centers Limited

Partnership v. Clark, 137 S. Ct. 1421, 1424 (2017) (citation omitted).

“[T]he existence of an arbitration provision and a liberal policy favoring

arbitration does not require the rubber stamping of all disputes as subject to

arbitration.” Pisano v. Extendicare Homes, Inc., 77 A.3d 651, 661 (Pa.

Super. 2013) (citation omitted).        “This is especially true where holding

otherwise would operate against principles of Pennsylvania contract law and

the FAA.” Id.

         We find that the trial court erred as a matter of law in determining that

McIlwain had the authority to sign the arbitration agreement on behalf of

Franks. Absent an agency relationship, we hold that McIlwain did not have

authority to sign the arbitration agreement on behalf of Franks. We reverse

the trial court’s order bifurcating the survival claims, and remand for further

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proceedings consistent with this opinion. The survival claims are to proceed

in the trial court concurrent with the wrongful death and negligence claims.

     Order reversed. Case remanded.

     Jurisdiction Relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/22/19

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