Opinion
No. 1 CA-CV 14-0338
06-04-2015
PHILLIP HURST, Personal Representative of the Estate of FRANCES M. HURST, on behalf of the ESTATE OF FRANCES M. HURST, and PHILLIP HURST, Personal Representative, on behalf of FRANCES M. HURST'S statutory beneficiaries pursuant to A.R.S. Section 12-612(A), Plain tiff/Appellee, v. SILVER CREEK INN, L.L.C., a California limited liability company dba SILVER CREEK LEISURE LIVING; SILVER CREEK INN ASSETS, L.L.C., a California limited liability company; SILVER CREEK INN CORPORATION, a California corporation; SILVER CREEK INN GENERAL PARTNER, a California general partnership; RENEE FLEMINKS, manager, Defendants/Appellants.
COUNSEL Wilkes & McHugh, P.A., Phoenix By Melanie L. Bossie, Donna Y. Oh Co-Counsel for Plaintiff/Appellee Law Office of Scott E. Boehm, P.C., Phoenix By Scott E. Boehm Co-Counsel for Plaintiff/Appellee Jones Skelton & Hochuli, P.L.C., Phoenix By Jay P. Rosenthal, Douglas R. Cullins, Jonathan Paul Barnes, Jr. Counsel for Defendants/Appellants
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Mohave County
No. S8015CV201300871
The Honorable Lee Frank Jantzen, Judge
AFFIRMED
COUNSEL Wilkes & McHugh, P.A., Phoenix
By Melanie L. Bossie, Donna Y. Oh
Co-Counsel for Plaintiff/Appellee
Law Office of Scott E. Boehm, P.C., Phoenix
By Scott E. Boehm
Co-Counsel for Plaintiff/Appellee
Jones Skelton & Hochuli, P.L.C., Phoenix
By Jay P. Rosenthal, Douglas R. Cullins, Jonathan Paul Barnes, Jr.
Counsel for Defendants/Appellants
MEMORANDUM DECISION
Presiding Judge Margaret H. Downie delivered the decision of the Court, in which Judge Kenton D. Jones and Judge Jon W. Thompson joined. DOWNIE, Judge:
¶1 Silver Creek Inn Assets, L.L.C., Silver Creek Inn, L.L.C. dba Silver Creek Leisure Living, Silver Creek Inn Corporation, Silver Creek Inn General Partner, and Renee Fleminks (collectively, "Silver Creek") appeal from the superior court's denial of their motion to compel arbitration. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 In September 2009, Phillip Hurst accompanied his mother, Frances Hurst ("Mother"), to a Silver Creek assisted living facility, where she was admitted as a resident. Hurst signed several documents at the time of Mother's admission to Silver Creek, including:
• Residency Agreement
• Addendum of Informed Choice
• Acknowledgment of Receipt
• Arbitration Agreement
• Medical History
• Resident Service Plan
• Notice of Privacy Practices
¶3 On some of the documents, Hurst wrote "P.O.A." after his signature, though he does not recall obtaining a power of attorney for Mother. Hurst signed other documents containing various pre-printed designations, including "Resident or Resident' [sic] Representative," "Responsible Party on Behalf of Resident," "Resident's Representative," and "Responsible Party."
¶4 Mother left Silver Creek and moved to a different care facility ("Legacy") in April 2010, where she resided until her death in August 2011. As personal representative of Mother's estate, Hurst sued Silver Creek and several Legacy-related entities, asserting claims under the Adult Protective Services Act ("APSA") and, as to the Legacy defendants, wrongful death.
¶5 Silver Creek moved to compel arbitration, which Hurst opposed. After briefing and oral argument, the superior court denied the motion. Silver Creek unsuccessfully sought reconsideration. After the court entered a signed judgment denying the motion to compel arbitration, Silver Creek timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101.01(A)(1).
DISCUSSION
¶6 Silver Creek contends Hurst had actual or apparent authority to sign the Arbitration Agreement on Mother's behalf, or, alternatively, that the superior court should have held an evidentiary hearing to ascertain his authority. The validity and enforceability of an arbitration agreement is a mixed question of fact and law that we review de novo. Estate of Decamacho ex rel. Guthrie v. La Solana Care & Rehab, Inc., 234 Ariz. 18, 20, ¶ 9, 316 P.3d 607, 609 (App. 2014).
¶7 An arbitration agreement is valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. A.R.S. § 12-1501; U.S. Insulation, Inc. v. Hilro Constr. Co., 146 Ariz. 250, 256, 705 P.2d 490, 496 (App. 1985). When a party denies the existence of an enforceable agreement to arbitrate, the court "shall proceed summarily to the determination of the issue so raised." A.R.S. § 12-1502(A). "[C]ourts have repeatedly analogized a trial court's duty in ruling on a motion to compel arbitration [with] its duty in ruling on a motion for summary judgment." Ruesga v. Kindred Nursing Ctrs., L.L.C., 215 Ariz. 589, 596, ¶ 23, 161 P.3d 1253, 1260 (App. 2007). Proceeding summarily means that the trial court initially determines whether material issues of fact are disputed and, if so, the court conducts an evidentiary hearing to resolve the disputes. Id. at ¶ 24; Brake Masters Sys., Inc. v. Gabbay, 206 Ariz. 360, 365, ¶¶ 13-14, 78 P.3d 1081, 1086 (App. 2003) (summary judgment standard appropriate in determining need for evidentiary hearing regarding existence or terms of arbitration agreement).
¶8 Absent a valid agency relationship, the Arbitration Agreement is not binding on Mother's estate. See Bank of Douglas v. Robinson, 78 Ariz. 231, 239, 278 P.2d 417, 422 (1954); see also Ruesga, 215 Ariz. at 596, ¶ 23, 161 P.3d at 1260. For purposes of this appeal, we accept, without deciding, Silver Creek's assertion that the superior court erroneously deemed Mother incompetent at the time of her admission to its facility. Even assuming Mother was competent, though, we affirm because, as a matter of law, no agency relationship existed based on the undisputed facts before the superior court. See Ruesga, 215 Ariz. at 595, ¶ 21, 161 P.3d at 1259 (when material facts not in dispute, determination of agency is a question of law for the court); see also Ariz. Board of Regents v. State ex rel. State of Ariz. Pub. Safety Ret. Fund Manager Adm'r, 160 Ariz. 150, 154, 771 P.2d 880, 884 (App. 1989) (appellate court will affirm superior court's decision if it is correct for any reason). I. Agency
¶9 Agency is the fiduciary relationship arising when one person (the principal) manifests assent to another person (the agent) that the agent act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents to act. Restatement (Third) of Agency § 1.01; see also Perez v. First Am. Tit. Ins. Co., 810 F. Supp. 2d 986, 992 (D. Ariz. 2011) ("Arizona has adopted the definition of 'agency' embodied in the Restatement (Third) of Agency."). Agency may be established through either actual or apparent authority. Restatement (Third) of Agency §§ 2.01, 2.02; see Goodman v. Physical Res. Eng'g, Inc., 229 Ariz. 25, 29, ¶ 12, 270 P.3d 852, 856 (App. 2011). Actual authority may be express or implied. Canyon State Canners v. Hooks, 74 Ariz. 70, 72, 243 P.2d 1023, 1025 (1952).
A. Actual Express Authority
¶10 "An agent holds express authority if there is evidence that the principal has delegated authority by oral or written words which authorize him to do a certain act or series of acts." Goodman, 229 Ariz. at 29, ¶ 12, 270 P.3d at 856. Express authority "may be proved by direct evidence of express contract of agency between the principal and agent." Ruesga, 215 Ariz. at 597, ¶ 29, 161 P.3d at 1261. "'[E]xpress authority' often means actual authority that a principal has stated in very specific or detailed language." Restatment (Third) of Agency § 2.01 cmt. b.
¶11 Nothing in the record suggests Mother gave express oral or written assent to Hurst's authority. Silver Creek contends actual express authority exists because Hurst signed the Arbitration Agreement on a line entitled "Responsible Party on Behalf of Resident." However, Hurst's conduct cannot establish an express delegation by Mother. See Svcs. Holding Co. v. Transamerica Occidental Life Ins. Co., 180 Ariz. 198, 203, 883 P.2d 435, 440 (App. 1994) ("[T]he source of the authority, actual or apparent, is the principal."). Silver Creek has not claimed that Mother said anything at all about her son's authority to act on her behalf. Nothing in the record before the superior court created a question of fact about whether Hurst had actual express authority.
B. Actual Implied Authority
¶12 "An agent acts with actual authority when, at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal's manifestations to the agent, that the principal wishes the agent to so act." Restatement (Third) of Agency § 2.01; see also Ruesga, 215 Ariz. at 597, ¶ 29, 161 P.3d at 1261. Although authority of this nature is implied, it is nonetheless dependent on manifestations by the principal:
An implied agency must be based on facts for which the principal is responsible; they must, in the absence of estoppel, be such as to imply an intention to create the agency, and the implication must arise from a natural and reasonable, and not from a forced, strained, or distorted, construction of them. They must lead to the reasonable conclusion that mutual assent exists, and be such as naturally lead another to believe in and to rely on the agency.Canyon State Canners, 74 Ariz. at 73, 243 P.2d at 1025.
¶13 Otherwise stated, "[t]he nature and extent of an agent's authority ultimately may be established only by tracing it to its source in some word or act of the alleged principal. The agent certainly cannot confer authority upon himself, or make himself agent, merely by acting as such or saying that he is one." Phx. W. Holding Corp. v. Gleeson, 18 Ariz. App. 60, 66, 500 P.2d 320, 326 (1972); see also Restatement (Third) of Agency § 2.01 cmt. c ("Actual authority is a consequence of a principal's expressive conduct toward an agent, through which the principal manifests assent to be affected by the agent's action."). "A principal's unexpressed willingness that another act as agent does not create actual authority." Restatement (Third) of Agency § 3.01 cmt. b.
¶14 The record is silent regarding any words or conduct by Mother that manifested assent for Hurst to act as her agent. Contrary to Silver Creek's contention, her purported silence while Hurst signed various documents, including the Arbitration Agreement, is insufficient. See id. Nothing suggests Mother knew anything about the documents Hurst signed or made statements or gestures before, during, or after their signing that gave rise to an issue of fact regarding actual implied authority. Indeed, a declaration from Silver Creek manager Gerard Fleminks, submitted in support of the motion to compel arbitration, focuses only on Hurst's conduct and says nothing whatsoever about Mother's participation, conduct, or words.
¶15 Silver Creek's reliance on Ruesga is unavailing. Ruesga was admitted to a care center "in a severely compromised state" after suffering a stroke and heart attack; he "was virtually non-responsive." Ruesga, 215 Ariz. at 591, ¶ 2, 161 P.3d at 1255. Ruesga's wife ("Wife") signed a series of admission documents, including an arbitration agreement. Id. at 591-92, ¶¶ 3-4, 161 P.3d at 1255-56. Wife had no power of attorney, and Ruesga had not given her express authorization to sign the arbitration agreement. Id. at 592, ¶ 5, 161 P.3d at 1256. In subsequent litigation brought by Wife, the care center moved to compel arbitration. Id. at ¶ 6. The superior court granted the motion, and Wife appealed. Id. at 592-93, ¶¶ 6-7, 161 P.3d at 1256-57.
¶16 This Court affirmed, holding that Wife had actual implied authority to execute the arbitration agreement. Id. at 599-600, ¶¶ 36, 40, 161 P.3d at 1263-64. The care center had "produced several medical records that revealed a history of [Wife's] acting and making decisions on [Ruesga's] behalf." Id. at 599, ¶ 35, 161 P.3d at 1263. Additionally, Wife had an almost fourteen-year history of signing documents for Ruesga, demonstrating that he "had consented to his wife's control of his care and his insurance matters." Id.
¶17 Unlike Ruesga, nothing in our record suggests that Hurst had a history of signing on Mother's behalf as of the time of her admission to Silver Creek. See, e.g., Rebecca E. Hatch, Cause of Action for Enforcement of Arbitration Clause in Long-Term Care Agreement, in 41 Causes of Action 2d 1, § 16 (2009) (A party "filing a motion to compel arbitration must be sure that there are sufficient facts to prove that an implied agency relationship existed at the time the arbitration agreement was signed."). The only evidence similar to Ruesga is the familial relationship between Hurst and Mother. Standing alone, such a relationship is insufficient to confer agency. See Ruesga, 215 Ariz. at 598, ¶ 33, 161 P.3d at 1262. Under the undisputed facts before the superior court, as a matter of law, actual implied authority did not exist.
C. Apparent Authority
¶18 Silver Creek alternatively contends Hurst had apparent authority to act on Mother's behalf. "The touchstone of apparent authority is conduct of a principal that allows a third party reasonably to conclude that an agent is authorized to make certain representations or act in a particular way." Miller v. Mason-McDuffie Co. of S. Cal., 153 Ariz. 585, 589, 739 P.2d 806, 810 (1987); see also Servs. Holding Co. v. Transamerica Occidental Life Ins. Co., 180 Ariz. 198, 203, 883 P.2d 435, 440 (App. 1994) ("[T]he source of the authority, actual or apparent, is the principal."). As with actual authority, apparent authority must be "traceable to manifestations of the principal." Restatement (Third) of Agency § 2.03. For the same reasons discussed supra regarding actual authority, the record reveals no manifestations by Mother that could establish Hurst's apparent authority to act as her agent in signing the Arbitration Agreement.
D. Ratification
¶19 Silver Creek also argues Mother acquiesced to Hurst's signature on the Arbitration Agreement "by accepting the benefit of the bargain without objection, and living at the Silver Creek facility for the better part of a year," and such acquiescence amounted to ratification. We disagree. "[M]ere silence or failure of a principal to repudiate the unauthorized act of an agent does not necessarily amount to a ratification unless the silence or acquiescence in question cannot be explained on any other theory than that of ratification." 2A C.J.S. Agency § 72.
¶20 Ratification is the affirmance of a prior act by another, whereby the act is given effect as if done by an agent acting with actual authority. Restatement (Third) of Agency § 4.01. A person ratifies an act by (a) manifesting assent that the act shall affect the person's legal relations, or (b) conduct that justifies a reasonable assumption that the person so consents. Id. Ratification may also exist when a principal accepts the benefit of a purported agent's unauthorized act with knowledge of the material facts. Phx. W. Holding Corp., 18 Ariz. App. at 66, 500 P.2d at 326.
¶21 The only evidence of ratification that Silver Creek proffers is Mother's residency at its facility. Although this might be evidence that Mother acquiesced to her stay at Silver Creek, it does not demonstrate her assent to the Arbitration Agreement. There is no evidence that Hurst or Silver Creek representatives ever spoke with Mother regarding arbitration or the Arbitration Agreement. Nor is there evidence Mother had knowledge of the material facts regarding that agreement. Under these circumstances, no ratification of the Arbitration Agreement occurred as a matter of law.
E. Statutory Agency
¶22 In rather cursory fashion, Silver Creek contends Hurst was authorized to act as Mother's agent under A.R.S. § 36-3231(A)(2), which confers authority on "[a]n adult child of the patient . . . to make health care decisions for the patient" if the "adult patient is unable to make or communicate health care treatment decisions." Even assuming that Silver Creek has properly preserved this argument for our review, we disagree. The statute confers authority to make "health care decisions." Whether to agree to arbitration is not a health care decision, particularly where, as here, the agreement to arbitrate is not a condition of admission or treatment.
CONCLUSION
Based on our determination, we need not address Hurst's alternative arguments regarding the purported invalidity of the Arbitration Agreement.
¶23 We affirm the judgment of the superior court. We award Hurst his taxable costs on appeal upon compliance with ARCAP 21.