Opinion
No. WD67920
March 18, 2008
Appeal from the Circuit Court of Jackson County, The Honorable Jon R. Gray, Judge.
Stephen Strum, St. Louis, for Appellant.
Phillip Burdick, St. Joseph, for Respondent.
Before: Victor C. Howard, Chief Judge, Paul M. Spinden, Judge, and Ronald R. Holliger, Judge.
Beverly Manor appeals the order of the circuit court of Jackson County denying its motion to compel arbitration of Dale Lawrence's wrongful death claim. Although Beverly Manor asserts that it has a right to interlocutory appeal pursuant to Section 435.440.1(1), RSMo 2000, and 9 U.S.C. Section 16(a)(1)(B) (1999), its agreement to arbitrate declared that the federal statutes would govern.
This lawsuit concerns an agreement between Beverly Manor and Dorothy Lawrence executed during March 2003 by Lawrence's daughter, acting as Lawrence's attorney in fact, to obtain Lawrence's acceptance as a resident at Beverly Manor's facility. The agreement between Beverly Manor and Lawrence contained provisions for arbitrating any claims that Lawrence had against Beverly Manor.
Lawrence died a brief time after being admitted to Beverly Manor's facility. Her son, Dale Lawrence, filed a two — count wrongful death petition against Beverly Manor. He alleged that his mother suffered fatal injuries to her head when Beverly Manor's employees negligently dropped her. Beverly Manor responded to Dale Lawrence's lawsuit by filing a motion to compel arbitration of his claims. The circuit court denied its motion, and Beverly Manor appeals.
Beverly Manor asserts three points on appeal, but it actually has but one claim: that the circuit court erred in overruling its motion to compel arbitration. Beverly Manor asserts that the arbitration agreement is binding on Dale Lawrence although he was not a party to the agreement.
This court's review of the circuit court's denial of a motion to compel arbitration is de novo. Finney v. National Healthcare Corporation, 193 S.W.3d 393, 394 (Mo.App. 2006). Before the circuit court compels parties to arbitrate their disputes, it must determine whether or not they contracted to arbitrate. Id. at 395. The circuit court cannot compel a party to arbitrate unless he or she has agreed to do so. Id.
The arbitration agreement between Dorothy Lawrence and Beverly Manor said:
It is understood and agreed by [Beverly Manor] and [Dorothy Lawrence] that any and all claims, disputes and controversies . . . arising out of, or in connection with, or relating in any way to the Admission Agreement or any service or health care provided by [Beverly Manor] to [Dorothy Lawrence] shall be resolved exclusively by binding arbitration[.]
It is the intention of the parties to this Arbitration Agreement that it shall inure to the benefit of and bind the parties, their successors, and assigns, including without limitation the agents, employees and servants of [Beverly Manor], and all persons whose claim is derived through or on behalf of [Dorothy Lawrence], including any parent, spouse, sibling, child, guardian, executor, legal representative, administrator or heirs of [Dorothy Lawrence]. The parties further intend that this agreement is to survive the lives or existence of the parties hereto.
Dale Lawrence did not sign the agreement, and, after his mother's death, he filed a petition against Beverly Manor asserting two wrongful death claims under Section 537.080. This statute says:
Whenever the death of a person results from any act, conduct, occurrence, transaction, or circumstance which, if death had not ensued, would have entitled such person to recover damages in respect thereof, the person or party who, or the corporation which, would have been liable if death had not ensued shall be liable in an action for damages, notwithstanding the death of the person injured[.]
The parties agree that, were Dorothy Lawrence alive, the arbitration agreement would be binding on her and would require her to arbitrate any negligence claim that she might assert against Beverly Manor. The parties also agree that, if Dale Lawrence's wrongful death claims are derivative claims derived from his mother's claims, he is bound by the arbitration agreement. Indeed, if Dale Lawrence is asserting claims through a derivative right, he has no greater right than his mother's and could not make any claims that she would be prohibited from making. See Roberts v. Progressive Northwestern Insurance Company, 151 S.W.3d 891, 899 (Mo.App. 2004).
In denying Beverly Manor's motion to compel arbitration, the circuit court concluded that Dale Lawrence's wrongful death claims were not derivative claims but were new and independent claims:
Despite the fact that the decedent's daughter was an agent for the purpose of securing residential treatment for the decedent during her lifetime, nothing in the arbitration agreement can be construed to extend to new and independent causes of action others would have such as this action for wrongful death. The decedent had no right of action for wrongful death. It therefore follows that she could not bind or limit any person who had a right of action arising by reason of her death at some point in the future.
In reaching this conclusion, the circuit court relied on Finney v. National Healthcare Corporation, 193 S.W.3d 393, 395 (Mo.App. 2006), which declared:
The wrongful death claim does not belong to the deceased or even to a decedent's estate. Campbell v. Callow, 876 S.W.2d 25, 26 (Mo.App. S.D.1994). "`The wrongful death act creates a new cause of action where none existed at common law and did not revive a cause of action belonging to the deceased.'" O'Grady v. Brown, 654 S.W.2d 904, 910 (Mo. banc 1983) (quoting State ex rel. Jewish Hospital v. Buder, 540 S.W.2d 100, 104 (Mo.App. St. L. D. 1976)). A wrongful death action is not a transmitted right nor a survival right but is created and vested in the statutorily designated survivors at the moment of death. Id. at 910. The damages under section 537.080 are different than the damages Decedent would have been entitled to in a personal injury action against Appellants. Under Missouri's wrongful death statute, the party or parties may receive "pecuniary losses suffered by reason of the death, funeral expenses, and the reasonable value of the services, consortium, companionship, comfort, instruction, guidance, counsel, training, and support of which those on whose behalf suit may be brought have been deprived by reason of such death." Section 537.090.
The circuit court is correct that the issue in Finney is essentially identical to the issue raised by Dale Lawrence's action. In Finney, the decedent was admitted to a nursing home, and her granddaughter signed an arbitration agreement on her behalf, which required her to arbitrate any claims against the nursing home. After the decedent's death, her daughter brought a wrongful death claim against the nursing home. Relying on the legal principle that a wrongful death claim is a new and independent cause of action and is not derived from a cause of action that the decedent would have had, the Finney court held that the daughter was not bound by an arbitration agreement that she did not sign.
The legal position announced in Finney — that a wrongful death claim is a new and independent cause of action and not a derivative action — is consistent with the legal position that the Supreme Court has taken. The Finney court correctly quoted the Supreme Court's opinion in O'Grady: "`The wrongful death act creates a new cause of action where none existed at common law and did not revive a cause of action belonging to the deceased'. . . . The right of action thus created is neither a transmitted right nor a survival right." 654 S.W.2d at 910 (citation omitted). The Supreme Court reiterated this legal position in Sullivan v. Carlisle, 851 S.W.2d 510, 515 (Mo. banc 1993), and American Family Mutual Insurance Company v. Ward, 774 S.W.2d 135, 136 — 37 (Mo. banc 1989). In Ward, the Supreme Court traced this legal principle back to the 1940s. Hence, at first blush, Finney would provide an appropriate legal basis for the circuit court's conclusion.
Since the circuit court issued its order on January 5, 2007, however, the Supreme Court issued its opinion in State ex rel. Burns v. Whittington, 219 S.W.3d 224, 225 (Mo. banc 2007), in which it held: "Although death is the necessary final event in a wrongful death claim, the cause of action is derivative of the underlying tortious acts that caused the fatal injury." In Burns, the original plaintiff filed a personal injury lawsuit in the circuit court of the city of St. Louis. The General Assembly later amended the venue statute to provide that tort cases must be filed in the county where the plaintiff is "first injured," which in this case would have been St. Louis County. After this amendment, the original plaintiff died, and his heir amended the petition to file a wrongful death claim. The defendant filed a motion to transfer venue to St. Louis County on the ground that the wrongful death claim was a new cause of action and, therefore, the new venue statute was applicable. After the circuit court granted the motion, the plaintiff filed for a writ of mandamus. The Supreme Court framed the issue as whether or not an "amended petition asserting a wrongful death claim constituted a new cause of action requiring transfer to St. Louis County" and held that venue was proper in the city of St. Louis. Id. at 225.
Given the Supreme Court's framing of the issue — whether or not an "amended petition asserting a wrongful death claim constituted a new cause of action requiring transfer to St. Louis County" — for it to conclude that venue was proper in the city of St. Louis, the court necessarily had to hold that a wrongful death claim was not a new and independent cause of action that was subject to the new venue statute. Burns unquestionably changed Missouri's wrongful death law.
An attempt to limit Burns to its facts and hold that it is distinguishable because it "involved an `amended petition' rather than a new petition for wrongful death" is unavailing. One could read Burns as holding that amending an existing cause of action to assert a claim for wrongful death does not constitute the filing of a new cause of action because the actions are so closely related. At first blush, such a reading seems reasonable until one realizes that it, too, would be a significant departure from previous case law. For example, in O'Grady, 654 S.W.2d at 910, the Supreme Court declared that a wrongful death claim is a new cause of action because it is so unrelated to any cause of action that the deceased would have had. Reading Burns in this manner, therefore, seems to be merely an attempt to avoid an untenable result.
Nor can Burns be dismissed as mere dictum. For the Burns court's declaration to be dictum, we would have to conclude that it was unnecessary to the court's holding. The declaration was the essence of its holding. The conclusion that a wrongful death claim is a derivative claim was necessary to the Supreme Court's holding that venue was proper in the city of St. Louis. Dismissing the declaration as dictum does not avoid Burns' seeming untenable holding, either.
Although the Supreme Court did not declare Sullivan and Ward to be overruled, this court is duty bound to follow the Supreme Court's pronouncement concerning Missouri law. Kansas City Power and Light Company v. Bibb and Associates, Inc., 197 S.W.3d 147, 159 (Mo.App. 2006). Burns held that a wrongful death claim is a derivative action, and we dutifully follow.
The issue, therefore, becomes whether or not the Supreme Court's holding in Burns should be applied retroactively to Dale Lawrence's case. He initiated his wrongful death action against Beverly Manor before Burns.
The courts generally should apply a decision overruling a prior rule of substantive law retroactively. Sumners v. Sumners, 701 S.W.2d 720, 723 (Mo. banc 1985). One exception to this rule are cases in which the "parties have relied on the state of the decisional law as it existed prior to the change, courts may apply the law prospectively — only in order to avoid injustice and unfairness." Id.
In Sumners, the Supreme Court adopted a three — factor test for determining whether or not to apply a change in substantive law prospectively only. First, the decision "`must establish a new principle of law . . . by overruling clear past precedent[.]'" Id. at 724 (citation omitted). Second, we must determine whether or not the purpose and effect of the new rule will be enhanced or retarded by applying the rule retroactively. Id. The third factor involves a balancing of interests:
[T]he Court must balance the interests of those who may be affected by the change in the law, weighing the degree to which parties may have relied upon the old rule and the hardship that might result to those parties from the retrospective operation of the new rule against the possible hardship to those parties who would be denied the benefit of the new rule.
Id.
In this case, the decision in Burns undoubtedly establishes a new rule of law by declaring that a wrongful death claim is no longer an independent cause of action but is a derivative claim. This is a clear departure from previous Supreme Court precedent and established law. This factor weighs against applying the rule retroactively.
The Supreme Court leaves us in a quandary concerning the second factor involving the purpose of the new rule and whether it will be enhanced or retarded by retroactive application of the new rule. The Supreme Court did not explain the purpose or rationale of declaring the change. Indeed, the purpose of this rule is quite unclear, but we can assume that the Supreme Court had a reason for the change and applying the new rule to this case will enhance the Supreme Court's purpose.
The third factor, the balancing of interests and hardship, weighs against applying the rule retroactively. It appears that, in light of the case law before Burns, the parties presumably knew when they executed the arbitration agreement that it did not cover wrongful death claims. Why Beverly Manor, as the party that prepared the contract, should gain the benefit of an unexpected and surprising change in Missouri law is unclear. Perhaps Dorothy Lawrence's daughter would have refused to sign the agreement had she known that a wrongful death claim was a derivative action and would be included in the arbitration agreement. Hence, fairness dictates that the parties receive the benefit of their bargain and that the courts construe the law as it existed when Beverly Manor and Dorothy Lawrence's daughter entered into this agreement.
Application of these factors set out in Sumners, leads to a conclusion that the change in law enunciated in Burns should not apply retroactively to Dale Lawrence's cause of action. Beverly Manor asserts alternatively, however, that the arbitration agreement is enforceable against Dale Lawrence because his sister agreed to arbitrate "any claims."
Pursuant to Section 537.080.2, RSMo 2000, "[o]nly one action may be brought under this section against any one defendant for the death of any one person." Pursuant to this statute, Dale Lawrence and his sister, Phyllis Skoglund, are in the class of people who are entitled to bring that one action. Beverly Manor contends that Dale Lawrence and Skoglund could maintain only one cause of action for wrongful death, and, acting on behalf of their mother, Skoglund agreed to arbitrate this claim.
Nothing in the record, however, indicates that Skoglund signed the arbitration agreement on her own behalf or on behalf of the wrongful death class. The evidence instead was that she signed it in her capacity as her mother's attorney in fact. She was acting as her mother's agent and was not bound by the arbitration agreement in the manner suggested by Beverly Manor. Nitro Distributing, Inc. v. Dunn, 194 S.W.3d 339, 345 (Mo. banc 2006).
This court, therefore, affirms the circuit court's decision not to compel arbitration of the agreement. We remand the case to the circuit court to dispose of Dale Lawrence's claim by trial.
Victor C. Howard, Chief Judge, and Ronald R. Holliger, Judge, concur in separate opinions.
Circuit court denied appellant's motion to compel arbitration of respondent's wrongful death claim against it. Appellant asserted that, because the decedent had executed an agreement to arbitrate any claims that she had against appellant and because respondent's wrongful death claim asserted that decedent had died as a result of appellant's negligence, the respondent was obligated by the agreement to arbitrate his claim against appellant.
Circuit court's judgment to refuse to enforce arbitration agreement is affirmed.
Although Supreme Court of Missouri held in State ex rel. Burns v. Whittington, 219 S.W.3d 224, 225 (Mo. banc 2007), that wrongful death claim is a derivative action, rather than an independent cause of action, the holding was a change in wrongful death law that was prospective only and not applicable to respondent's claim. Hence, pursuant to precedent prior to Whittington, respondent's claim should be deemed an independent cause of action not subject to decedent's agreement to arbitrate claims against appellant.
Concurring Opinions by Victor C. Howard, Chief Judge, and Ronald R. Holliger, Judge
CONCURRING OPINION
I concur with this court's affirmation of the trial court's decision denying a motion to compel arbitration of this wrongful death claim. I respectfully disagree, however, with the majority opinion's conclusion that State ex rel. Burns v. Whittington, 219 S.W.3d 224 (Mo. banc 2007) applies in this case. I also disagree on the issue of retroactive application of that decision. If Burns were applicable, I would necessarily vote to reverse the trial court's decision.
But I believe that Burns must be limited to the particular facts and legal issue raised there. Burns is distinguishable because it involved an "amended petition" rather than a new petition for wrongful death. In other words, I suggest that if there had been no pending personal injury case in the City of St. Louis to amend, venue could have only been proper in St. Louis County for original filing of a wrongful death action. This factual distinction in Burns has legal significance because of the particular wording chosen by the legislature in Section 538.305. That statute provides that the venue changes adopted by the legislature "apply to all causes of action filed after August 28, 2005."
I understand the opinion in Burns to hold that the amendment of the existing cause of action to assert a claim for wrongful death was so closely related that it was not the filing of a new cause of action. I, therefore, do not join in the conclusion that Burns, sub silentio, overruled the decisions in either O'Grady v. Brown, 654 S.W.2d 904 (Mo. banc 1983) or Finney v. National Healthcare Corporation, 193 S.W.3d 393 (Mo.App. 2006).
Concurring Opinion holds:
Judge Holliger concurs with the outcome, but disagrees with the majority's belief that State ex rel Burns v. Whittington, 219 S.W.3d 224 (Mo. banc 2007) applies to this case. He argues that if Burns did apply, he would vote to reverse the trial court's decision. He believes that Burns does not apply to new petitions.
CONCURRING OPINION
I concur in the result and agree with Judge Spinden that State ex rel. Burns v. Whittington, 219 S.W.3d 224, 225 (Mo. banc 2007), plainly states that "in a wrongful death claim, the cause of action is derivative of the underlying tortious acts," which, if meant as a holding, would reverse prior case law.
However, I would view the declaration in Burns as dictum — unnecessary to the result and, therefore, not binding on this court. See generally Swisher v. Swisher, 124 S.W.3d 477, 482 (Mo.App.W.D. 2003) (indicating that statements which are not essential to the court's decision are dicta and not binding precedent); City of Carthage v. United Mo. Bank of Kansas City, N.A., 873 S.W.2d 610, 615 (Mo.App.S.D. 1994) (the Missouri Court of Appeals is not bound by dicta of the Missouri Supreme Court).
Division IV holds:
State ex rel. Burns v. Whittington, 219 S.W.3d 224, 225 (Mo. banc 2007), plainly states that "in a wrongful death claim, the cause of action is derivative of the underlying tortious acts," which, if meant as a holding, would reverse prior case law. However, the declaration in Burns is dictum — unnecessary to the result and, therefore, not binding on this court. See generally Swisher v. Swisher, 124 S.W.3d 477, 482 (Mo.App.W.D. 2003) (indicating that statements which are not essential to the court's decision are dicta and not binding precedent); City of Carthage v. United Mo. Bank of Kansas City, N.A., 873 S.W.2d 610, 615 (Mo.App.S.D. 1994) (the Missouri Court of Appeals is not bound by dicta of the Missouri Supreme Court).
I, therefore, concur in the result reached by Judge Spinden.
This summary is UNOFFICIAL and should not be quoted or cited.