Opinion
C082024
05-22-2017
DEAN MAURICE HIGGS et al., Plaintiffs and Respondents, v. PLUM HEALTHCARE GROUP, LLC, et al., Defendants and Appellants.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34-2015-00186569-CU-PO-GDS)
Defendants, a skilled nursing facility and its corporate owner, appeal from denial of their petition to compel arbitration of a case alleging elder abuse and other claims filed by plaintiffs, former facility resident Dean Higgs and his friend Dennis Aguilar. (Code Civ. Proc., § 1294, subd. (a).) The petition was based on two arbitration agreements signed by Aguilar shortly after Higgs was admitted to the facility. Because we conclude that defendants failed to establish Aguilar had the authority to bind Higgs to arbitration of his claims, we shall affirm the trial court's denial of the petition to compel.
BACKGROUND
Dean Higgs, who is a quadriplegic and breathes by way of a tracheotomy, was admitted to Oleander Holdings, LLC dba Sacramento Post-Acute, a skilled nursing facility, on January 2, 2014. A week later (on January 9), Higgs's friend Dennis Aguilar signed a number of admission documents, including two arbitration agreements providing for arbitration of medical malpractice and other disputes.
In November 2015, plaintiffs Higgs and Aguilar brought suit against defendants Sacramento Post-Acute and its owner Plum Healthcare Group, LLC for elder abuse, negligent infliction of emotional distress (on Aguilar), and violation of the Patient's Bill of Rights. The complaint alleged that Sacramento Post-Acute had provided Higgs with poor care. Specifically, he developed two bedsores that devolved to stage IV pressure sores over his five stays at the facility. As a result, his left leg had to be amputated and he still had an up-to-the bone stage IV pressure sore on his sacrum, resulting in "devastating pain." At his initial discharge to the emergency room, Higgs was severely septic with a drug-resistant urinary tract infection.
Defendants brought a petition to compel arbitration based on the arbitration agreements that Aguilar had signed. Defendants asserted Aguilar signed the agreements pursuant to Higgs's durable power of attorney (DPOA) naming Aguilar as his attorney in fact. A copy of the DPOA showed it was executed on February 24, 2014--more than a month after Aguilar signed the agreements at issue.
Plaintiffs opposed the petition to compel arbitration, raising several reasons why it should be denied. Among these reasons, plaintiffs pointed out that the DPOA was executed after the arbitration agreements had been signed and argued defendants had no evidence that Aguilar had authority to sign those agreements on behalf of Higgs.
In support of their opposition, plaintiffs provided a declaration by Aguilar. Aguilar declared that he was told that he needed to sign the admission forms but was not told what they were, that they involved arbitration, or that he had a choice whether to sign them. The person from the facility never asked if Higgs was capable of signing and as far as Aguilar observed, Higgs was not involved in the signing process. The person from the facility never asked Higgs to sign or if Aguilar could sign for him. Aguilar did not read the paperwork or discuss it with Higgs. Aguilar declared he had not been given authorization to sign; Higgs made his own healthcare decisions.
Plaintiffs also provided various medical documents on which Higgs's verbal consent to a particular treatment was noted in writing. The first entry on the physician's report at admission noted that Higgs "[i]s capable of understanding rights, responsibilities, and informed consent."
The trial court granted calendar preference to set the trial within 120 days pursuant to Code of Civil Procedure section 36, subdivision (a), as Higgs was a person over 70 years of age in poor health.
In reply, defendants argued that Higgs was physically unable to sign and he had verbally authorized Aguilar to sign. For the first point, defendants relied on medical records (prior to Higgs's admission) that indicated his movement was limited to his right lower extremity and his left upper arm. For the second point, defendants provided the declaration of Susan Chance.
Chance had been a receptionist at Sacramento Post-Acute in January 2014. She declared she had executed the arbitration agreements at issue for her employer. She did not specifically remember Higgs's admission, which she referred to as occurring on January 9, 2014 (rather than on January 2, when it actually occurred). Her declaration did not speak to any other specific dates, including the date of her signature on the agreements, which was January 10--the day after Aguilar signed the documents for Higgs. She declared that admission documents were often signed by family members or friends when the resident was unable to do so. "Pursuant to my training, custom and practice, I would never allow another person to sign the admission documents on behalf of a resident without first ensuring that the resident specifically authorized the friend/family member to do so on their behalf. I would also ensure the resident understood that the friend/family member would be executing the documents and that I had the resident's permission to allow the friend/family member to do so. [¶] When going through the admission documents, whether with a resident or a friend or a family member, I would carefully go through each and every document with them, answer any questions and make sure they were properly executed. This was particularly true in January of 2014 as I was just beginning to take on these job duties and I was very careful and wanted to make sure everything was understood and executed properly."
Plaintiffs objected to Chance's declaration on the grounds that it was improper new evidence in a reply, it lacked foundation because it failed to indicate how many times she had faced a similar situation to establish a habit or custom, and it lacked credibility because defendants had changed their argument as to the source of Aguilar's authority (from their original claim that Aguilar signed per the DPOA).
The trial court sustained plaintiffs' objections, finding Chance's declaration "not the most compelling" and "a bit thin." The court contrasted Chance's vague declaration with Aguilar's specific one. It also noted that it could make a factual determination by weighing the declarations.
The court denied the motion to compel arbitration. In doing so, the court quoted from case law cautioning that an agency cannot be created by the acts of the agent alone and that a third party takes a risk in dealing with an agent and must ascertain both that an agency was created and the agency's scope.
DISCUSSION
I
Validity of Executed Arbitration Agreements
A. Procedure for Compelling Arbitration
There is a summary procedure to resolve a petition to compel arbitration. (Code Civ. Proc., §§ 1281.2, 1290.2.) "The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination. [Citation.]" (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972 (Engalla).)
"There is no uniform standard of review for evaluating an order denying a motion to compel arbitration. [Citation.] If the court's order is based on a decision of fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the court's denial rests solely on a decision of law, then a de novo standard of review is employed. [Citations.]" (Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425.)
Here, the trial court found defendants failed to carry their burden to establish that Higgs was bound by the arbitration agreements. Because the court excluded Chance's declaration, its decision to deny the petition to compel arbitration was based on undisputed facts. Thus our review is de novo. (Garrison v. Superior Court (2005) 132 Cal.App.4th 253, 263.)
B. Aguilar's Authority to Bind Higgs
The right to arbitration depends on a contract. "Although California has a strong policy favoring arbitration [citations], our courts also recognize that the right to pursue claims in a judicial forum is a substantial right and one not lightly to be deemed waived. [Citations.] Because the parties to an arbitration clause surrender this substantial right, the general policy favoring arbitration cannot replace an agreement to arbitrate. Thus, the right to compel arbitration depends upon the contract between the parties, [citations], and a party can be compelled to submit a dispute to arbitration only where he has agreed in writing to do so." (Marsch v. Williams (1994) 23 Cal.App.4th 250, 254-255.)
Although generally, "a person who is not a party to an arbitration agreement is not bound by it," there is an exception where "a person who is authorized to act as the patient's agent can bind the patient to an arbitration agreement." (Flores v. Evergreen at San Diego, LLC (2007) 148 Cal.App.4th 581, 587 (Flores).) "In California agency is either actual or ostensible. (Civ. Code, § 2298.) An agency is actual when the agent is really employed by the principal. (Civ. Code, § 2299.) An agency is ostensible when a principal causes a third person to believe another to be his agent, who is really not employed by him. (Civ. Code, § 2300.)" (Van Den Eikhof v. Hocker (1978) 87 Cal.App.3d 900, 905.) "To establish ostensible authority in an agent, it must be shown the principal, intentionally or by want of ordinary care, has caused or allowed a third person to believe the agent possesses such authority." (Preis v. American Indemnity Co. (1990) 220 Cal.App.3d 752, 761.)
Defendants rely on the agency exception and contend Aguilar signed as the agent of Higgs. Originally, defendants relied on the DPOA. (See Garrison v. Superior Court, supra, 132 Cal.App.4th 253 [mother's designation of daughter in DPOA for health care authorized daughter to enter into binding arbitration agreements].) As plaintiffs pointed out, however, the DPOA was not yet in effect at the time Aguilar signed the agreements. Defendants contend other evidence establishes the agency.
A number of cases have addressed the situation where a third party signs an arbitration agreement between a resident and a residential care facility. In Pagarigan v. Libby Care Center, Inc. (2002) 99 Cal.App.4th 298 (Pagarigan), a woman was admitted to a nursing facility in a comatose state; her daughters signed her arbitration agreements. After she died, her daughters brought suit against the facility and it brought a petition to compel arbitration. (Id. at p. 300.) The court found arbitration agreements were not binding as the mother lacked capacity to authorize either daughter to act as her agent. That the daughters may have represented themselves as having the power to bind their mother was "totally irrelevant. A person cannot become the agent of another merely by representing herself as such." (Id. at p. 301.) "Defendants produced no evidence Ms. Pagarigan had ever employed either of her daughters as her agent in any capacity. Nor did defendants produce any evidence this comatose and mentally incompetent woman did anything which caused them to believe either of her daughters was authorized to act as her agent in any capacity." (Id. at p. 302.)
In Goliger v. AMS Properties, Inc. (2004) 123 Cal.App.4th 374 (Goliger), a daughter signed an admission form for a residential care facility as a "responsible party" for her mother, but not as an "agent." She also signed two arbitration agreements. After her mother died, the daughter sued the facility as her mother's successor for her mother's injuries and individually for her mother's wrongful death. The trial court denied the facility's motion to compel arbitration. (Id. at p. 376.) The facility argued the daughter was an ostensible agent of her mother, relying on evidence the mother, who was mentally alert, allowed her daughter to act for her in medical matters. For example, the mother instructed health care providers to communicate with her daughter; the daughter made medical appointments, refilled prescriptions, and signed a consent form for her mother's surgery; and the daughter helped develop and implement the mother's care plan. (Ibid.) The court rejected that argument, finding nothing to justify expanding the daughter's authority "beyond what the evidence shows [the] mother permitted." (Id. at p. 377.)
The facts of Flores, supra, 148 Cal.App.4th 581, bear an even stronger resemblance to the facts of the instant case. Josephina Flores, who was suffering from dementia and other ailments, was admitted to a skilled nursing facility. As part of the admission process, her husband Luis signed arbitration agreements. At that time, Luis did not have a power of attorney authorizing him to act for Josephina, but Josephine signed one nine months later. (Id. at p. 585.) After Josephina and Luis filed a civil action against the facility, the facility sought to compel arbitration based on the agreements Luis had signed. The trial court denied the petition to compel arbitration. (Id. at pp. 585-586.) The appellate court affirmed, noting an agency could not be formed based solely on the acts of the agent. (Id. at p. 588.) "The record is completely silent regarding Josephina's and Luis's dealings prior to her admission and/or their interactions at the time of her admission. The mere fact Luis signed the admission documents, including the arbitration agreements, is insufficient. Likewise, the fact that Josephina signed a general power of attorney form in February 2005 giving Luis agency authority does not provide the necessary evidentiary support. The power of attorney was created after Luis signed the admission documents in May 2004, and no facts were presented suggesting that by signing the power of attorney form Josephina intended to ratify Luis's earlier agreement to the arbitration." (Id. at pp. 588-589.)
Similarly, in Warfield v. Summerville Senior Living, Inc. (2007) 158 Cal.App.4th 443 (Warfield), plaintiff and her husband were residents of a care facility for the elderly. Plaintiff suffered from dementia and her husband had signed arbitration agreements on behalf of himself and plaintiff. (Id. at pp. 445-446.) When plaintiff sued for elder abuse and other claims, the facility petitioned to compel arbitration based on the arbitration agreements signed by the husband. (Id. at p. 446.) The facility argued evidence of plaintiff's consent to have her husband act as her agent was shown by her failure to object to the living arrangements selected by her husband and her willing acceptance of the services. The court rejected this argument for two reasons. First, it was not supported by citations to the record and therefore was waived. Second, "the failure of a resident suffering from dementia to object to the living arrangements her husband had made would hardly constitute evidence that she had authorized him to act as her agent in waiving her right to a jury trial." (Id. at p. 448.)
Defendants contend Pagarigan, Flores, and Warfield are distinguishable because in those cases the plaintiffs were incapacitated or suffering from dementia. Thus it was easy for the courts to find no evidence of consent to an agency. Here, by contrast, Higgs was mentally competent. We note that the mother in Goliger, discussed ante, was also competent and the court still found no agency agreement. Similarly, as we discuss below, here defendants did not provide sufficient evidence that Higgs consented to the agency, either actually or by conduct.
Defendants add that Flores and Warfield are further distinguishable because in those cases defendants argued the marital relationship created the agency--a contention that was rejected. (Flores, supra, 148 Cal.App.4th at p. 589; Warfield, supra, 158 Cal.App.4th at pp. 449-450.) Defendants attempt to limit Flores and Warfield to their rejection of the argument that the marital relationship established agency. We decline defendants' implicit invitation to ignore the portion of both cases requiring evidence of the principal's consent to the agency.
Defendants contend Aguilar's signature on the arbitration agreements is binding because "several relevant considerations" show Aguilar was acting as Higgs's actual or ostensible agent. First, defendants contend Aguilar signed "a whole host of admissions documents" that were necessary for admission while Higgs "was nearby and present." It is true that Aguilar signed several documents on January 9, 2014, but that fact alone is insufficient to establish agency. In Flores, the court found "[t]he mere fact Luis signed the admission documents, including the arbitration agreements, is insufficient." (Flores, supra, 148 Cal.App.4th at p. 588.) Further, the arbitration agreements were optional by law and could not have been a precondition to admission. (Health & Saf. Code, § 1599.81, subd. (a).)
Here, there is absolutely no evidence that Higgs ever knew Aguilar had signed the documents as his representative. Contrary to defendants' claim, there is no evidence Higgs was present or nearby when Aguilar signed the documents. Aguilar declared only that, "During the signing of the paperwork, from my observation [Higgs] was in no way aware of or involved in the process." The evidence does not establish where Higgs was at that time. Defendants assert Higgs "surely" knew that Aguilar had signed the documents because "otherwise that admission would not have been possible." There is no evidence Higgs knew this, especially since the documents were signed a week after his admission. The lack of evidence that Higgs knew Aguilar had signed admission documents--or even knew of the documents--defeats defendants' argument that Higgs allowed them to believe Aguilar had authority to act on his behalf by failing to object to Aguilar's signing.
Defendants contend that by accepting the benefits of admission to Sacramento Post-Acute, Higgs consented to Aguilar's acting as his agent and ratified all of Aguilar's actions. We disagree. At most, this evidence shows Higgs consented to his admission to the facility. As in Goliger, supra, 123 Cal.App.4th at page 377, nothing in the record justifies expanding Aguilar's authority beyond what the evidence shows Higgs permitted.
In Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122 (Young), a daughter signed an arbitration agreement upon her mother's admission to a skilled nursing facility following a stroke. In seeking to prove the daughter had authority to sign on her mother's behalf, defendants relied on evidence that the daughter knew the mother's wishes for medical care, was involved in certain aspects of that care, and had permission to "take care of details" like signing paperwork. (Id. at p. 1130.) The court found this evidence "a far cry from expressly authorizing her daughter to sign an agreement foregoing her right to a jury trial." (Ibid.)
Defendants contend Higgs's failure to rescind the arbitration agreements within 30 days of signing, as provided for in the agreements, provided evidence of the agency. The failure to rescind the arbitration agreements proves nothing absent evidence that Higgs knew of the agreements' existence.
Defendants argue that Aguilar believed he had authority to act for Higgs at the time he signed. The arbitration agreements included the following provision directly above Aguilar's signature. "By the signing this agreement the resident intends to express that I have full authority to act as the resident's agent in making healthcare decisions for the resident. I have full and express authority as the resident's agent to waive the resident's right to a jury trial and enter into this arbitration agreement. I agree that any claims that I may have as a successor in interest, heir, or representative of the resident or as an individual will be subject to the binding arbitration agreement set forth in this contract." We agree with the Pagarigan court that a person's representation that he has the power to bind the principal is "irrelevant" absent evidence that the principal intentionally or by a want of care caused a third person to believe such person is his agent. (Pagarigan, supra, 99 Cal.App.4th at pp. 301-302.)
Defendants contend the subsequent DPOA between Higgs and Aguilar "is powerful evidence" of their prior understanding of Aguilar's authority to sign the arbitration agreements. But this argument was rejected in Flores where, as here, there was no evidence that the subsequent power of attorney was intended to ratify earlier acts. (Flores, supra, 148 Cal.App.4th at pp. 588-589.)
In their reply brief, defendants argue that Aguilar has failed to provide a rational explanation of why he signed the documents if he did not have authority to do so, given Higgs's mental capacity. Defendants misallocate the burden of proof. The burden is not on Aguilar to explain his actions. The burden is on defendants to prove there is a valid arbitration agreement. (Engalla, supra, 15 Cal.4th at p. 972.)
As the trial court recited when denying the motion to compel: " 'A third person . . . is not compelled to deal with an agent, but if he does so, he must take the risk. He takes the risk not only of ascertaining whether the person with whom he is dealing is the agent, but also of ascertaining the scope of his powers.' [Citations.]' Even if there were sufficient evidence that [Aguilar] had actually represented that [he] was authorized to bind [Higgs] to arbitration, appellants took the risk that [he] in fact had no such authority. Absent proof of agency either through direct evidence or through reliance on [Higgs's] own conduct, appellants failed to demonstrate [Aguilar's] actual or ostensible authority to bind [Higgs]." (Young, supra, 220 Cal.App.4th at p. 1134.)
The trial court did not err in denying defendants' petition to compel arbitration.
II
Exclusion of the Chance Declaration
Health and Safety Code section 1599.65, subdivision (a) describes the procedure for a skilled nursing facility to obtain signatures on an admission contract. "Prior to or at the time of admission, the facility shall make reasonable efforts to communicate the content of the contract to, and obtain on the contract the signature of, the person who is to be admitted to the facility. Unless the prospective resident has been declared legally incompetent or is unable to understand and sign the contract because of his or her medical condition, he or she shall sign or cosign the admission agreement. In the event the patient is unable to sign the contract, the reason shall be documented in the resident's medical record by the admitting physician. This provision does not preclude the facility from obtaining the signature of an agent, responsible party, or a legal representative, if applicable." Chance's declaration purported to show compliance with these statutory requirements.
Defendants contend the trial court erred in excluding Chance's declaration. They assert the declaration was in direct response to Aguilar's declaration about the circumstances of the signing of the admission documents. They further contend the trial court improperly required greater specificity as to Chance's custom and practice. "We review a trial court's decision to admit or exclude evidence under the abuse of discretion standard." (Austin B. v. Escondido Union School Dist. (2007) 149 Cal.App.4th 860, 885.)
"Any otherwise admissible evidence of habit or custom is admissible to prove conduct on a specified occasion in conformity with the habit or custom." (Evid. Code, § 1105.) " ' "Habit" means a person's regular or consistent response to a repeated situation. "Custom" means the routine practice or behavior on the part of a group or organization that is equivalent to the habit of an individual.' (Jefferson, Cal. Evidence Benchbook (2d ed. 1982) § 33.8, p. 1267.)" (People v. Memro (1985) 38 Cal.3d 658, 681, fn. 22, overruled on another point by People v. Gaines (2009) 46 Cal.4th 172, 181, fn. 2.) "Custom or habit involves a consistent, semi-automatic response to a repeated situation." (Bowen v. Ryan (2008) 163 Cal.App.4th 916, 926.) " 'Habit' or 'custom' is often established by evidence of repeated instances of similar conduct." (Memro, at p. 681.)
Chance provided no evidence as to how many times she had allowed a third party to sign admission documents. We note that it is doubtful she had done so enough times for the practice to have become "semi-automatic," as her declaration explains that she had assumed these new duties less than two weeks before Aguilar signed the documents.
Because the declaration fell far short of establishing Chance's custom and practice, the trial court did not abuse its discretion in excluding Chance's declaration. Moreover, any error in excluding the declaration was not prejudicial. As the trier of fact, the trial court was entitled to weigh all the declarations and other documentary evidence to reach a final determination. (Engalla, supra, 15 Cal.4th at p. 972.) The record makes clear that the court found Aguilar's declaration more credible than Chance's, which it found "not the most compelling" and "a bit thin." As we have noted, Chance did not even have the correct date for Higgs' admission in her declaration. Further, Chance's claim that she went carefully over every agreement with the resident or family member and made sure each was properly signed is undercut by the fact that she did not sign the documents at the same time as Aguilar. She did not sign them until the next day, January 10. We see no prejudice, even assuming (but not finding) error.
DISPOSITION
The judgment is affirmed. Plaintiffs shall recover costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
/s/_________
Duarte, J. We concur: /s/_________
Blease, Acting P. J. /s/_________
Robie, J.