Opinion
E069868
04-10-2018
ROBERT MABEE et al., Plaintiffs and Respondents, v. HONEYFLOWER HOLDINGS, LLC, Defendant and Appellant.
Wilson Getty, William C. Wilson and Mark A. Ginella for Defendant and Appellant. Glenna M. Francis for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. RIC1712692) OPINION APPEAL from the Superior Court of Riverside County. Randall S. Stamen, Judge. Dismissed. Wilson Getty, William C. Wilson and Mark A. Ginella for Defendant and Appellant. Glenna M. Francis for Plaintiffs and Respondents.
Robert Mabee (Husband) and Jacqueline Burns (Daughter), in their individual capacities and as the successors-in-interest of Martha Mabee (Wife), sued Honeyflower Holdings, LLC, doing business as Arlington Gardens Care Center (Arlington). Husband and Daughter brought five causes of action: (1) elder abuse or neglect, (2) wrongful death, (3) breach of contract, (4) regulatory violations (Health & Saf. Code §§ 1430, 1424.5), and (5) negligent infliction of emotional distress. Arlington petitioned the trial court for an order compelling arbitration. (Code Civ. Proc., § 281.2.) The trial court denied Arlington's petition. Arlington contends the trial court erred. We dismiss the appeal.
All subsequent statutory references will be to the Code of Civil Procedure unless otherwise indicated.
FACTUAL AND PROCEDURAL HISTORY
A. COMPLAINT
The facts in this subsection are taken from Husband and Daughter's complaint. Husband was married to Wife. Daughter is the daughter of Husband and Wife. Husband and Wife lived together. Wife was 78 years old and had Parkinson's Disease. Wife lacked the legal capacity to make decisions. (Code Civ. Proc., § 352.) In May 2016 Wife fell and injured the right side of her body. Wife was stabilized at a hospital and then transferred to Arlington where she was to receive 24-hour nursing care as well as rehabilitation therapy. Arlington is a nursing home. Wife was admitted to Arlington on May 30, 2016.
While Wife was at Arlington:
(1) Arlington's lack of care caused Wife to develop pressure sores, which became infected;
(2) Arlington's lack of care caused Wife to become dehydrated and malnourished;
(3) Arlington failed to provide Wife with adequate bathing and failed to brush Wife's teeth;
(4) Arlington failed to dress Wife for lunch, which caused Wife to miss the only social event at Arlington, which was lunch in the dining room;
(5) Arlington left Wife naked below the waist on an occasion when Wife's granddaughter came to visit, causing Wife to suffer embarrassment;
(6) Arlington left Wife's call button beyond Wife's reach;
(7) Arlington failed to respond to Wife's call button;
(8) because Arlington did not respond to Wife's call button, Wife lacked assistance to move to the bathroom, therefore Wife had to wear a diaper despite being continent;
(9) due to a lack of infection control measures at Arlington, such as washing hands and wearing gloves, Wife contracted C-Difficile, a life-threatening bacterial infection, and developed sepsis;
(10) Arlington failed to notify Wife's doctor and family members of Wife's deteriorating condition;
(11) for several days, Arlington ignored Wife's complaints of hip pain, an x-ray at a hospital revealed Wife suffered a broken hip requiring surgery; and
(12) Arlington kept incomplete or inaccurate records concerning Wife's condition.
On July 19, 2016, Wife was taken to the hospital. Wife "was diagnosed with severe septic shock and multi-organ failure secondary to the C-Diff[icile] infection which had gone untreated by Arlington." Wife died on July 21, 2016.
The first cause of action concerned elder abuse or neglect. Husband and Daughter, as Wife's successors-in-interest, alleged Arlington neglected Wife by withholding medical treatment, palliative care, personal hygiene, food, and fluids. (Welf. & Inst. Code, § 15610.57.) The second cause of action was for wrongful death. Husband and Daughter, as Wife's surviving heirs, alleged Arlington failed to exercise reasonable diligence and skill in its care of Wife.
The third cause of action was for breach of contract. It was brought by Husband and Daughter as Wife's successors-in-interest. They alleged Arlington breached its agreement to provide Wife with skilled nursing care in compliance with state and federal regulations. The fourth cause of action concerned suing for civil damages due to violations of state regulations. (Health & Saf. Code, §§ 1426, 1430.) Husband and Daughter, as Wife's successors-in-interest, alleged Arlington violated various state regulations.
The fifth cause of action was brought by Husband and Daughter, in their individual capacities, and it concerned negligent infliction of emotional distress. Husband and Daughter witnessed Arlington's neglect of Wife, which caused Husband and Daughter to suffer emotional distress. Husband and Daughter sought general damages, special damages, punitive damages, attorneys' fees, costs, and any other proper relief.
B. MOTION TO COMPEL ARBITRATION
Arlington petitioned the trial court to compel arbitration. Arlington asserted that Wife was admitted to Arlington on May 30, 2016, and on June 15, 2016. On both occasions when Wife was admitted to Arlington, she lacked the capacity to make legal decisions. (§ 352.) On both occasions, Husband held himself out as Wife's legal representative. Husband signed admission paperwork that included an arbitration agreement for any claims related to Wife's care at Arlington. Arlington alleged Husband signed the arbitration agreements in his representative and individual capacities. Arlington asserted that because there were binding arbitration agreements in place, those agreements should be enforced. Arlington attached the arbitration agreements to its petition.
The last page of the arbitration agreements provided:
ARTICLE V
EXECUTION
5.1 The parties to the Arbitration Agreement hereby acknowledge and agree that, upon execution, any and all disputes or claims as to medical malpractice (that is, whether any medical services rendered during the Resident's admission were unnecessary or unauthorized or were improperly, negligently or incompetently rendered or not rendered) will be determined by submission to neutral arbitration, and not by a lawsuit or court process, except as California law provides for judicial review of arbitration proceedings. Such arbitration will be governed by this Arbitration Agreement. |PRINTED IN RED:| NOTICE: BY SIGNING THIS CONTRACT YOU ARE AGREEING TO HAVE ANY ISSUE OF MEDICAL MALPRACTICE DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP YOUR RIGHT TO A JURY OR COURT TRIAL. SEE ARTICLE I OF THIS CONTRACT. Date: __________
/s/_________
Resident By virtue of Resident's consent, instruction and/or durable power of attorney, I hereby certify that I am authorized to act as Resident's agent in executing and delivering this Arbitration Agreement. I acknowledge that the Facility is relying on this representation. I also acknowledge that pursuant to the terms of this Agreement, any claims that I may assert in my personal capacity that arise out of or relate to the provision of or failure to provide any services (medical or otherwise) or good by the Facility to the Resident or the Admission agreement are governed by this Arbitration Agreement. Date: 6/16/16
Robert Mabee
Legal Representative/Agent (if any) Date: 6/16/16
K . Amaral
Facility Representative
The May 31 and June 16 arbitration agreements were identical in the form language, that the top signature lines were blank, and that Husband signed both on the "Legal Representative" line.
C. OPPOSITION
Husband and Daughter opposed Arlington's petition to compel arbitration. They argued: (1) the arbitration agreements were invalid because Husband was not Wife's legal representative; (2) the arbitration agreements were unenforceable because they did not comply with statutory requirements; (3) the arbitration agreements were contracts of adhesion; (4) if Husband's case proceeded in arbitration while Daughter's case proceeded in court, there was a risk of conflicting rulings, so the entire case should proceed in court (§ 1281.2, subd. (c)); and (5) Husband cannot be compelled to arbitrate the causes of action brought in his individual capacity because the arbitration agreement was ambiguous as to whether it applied to Husband in his individual capacity.
D. REPLY
Arlington replied to Husband and Daughter's opposition. First, Arlington asserted that Husband should be estopped from arguing that the arbitration agreements were invalid due to Husband not being Wife's legal representative, because Husband held himself out to Arlington as Wife's legal representative. Second, Arlington argued Husband was Wife's ostensible agent because Husband presented himself as Wife's legal representative. Third, Arlington asserted the arbitration agreements meet statutory requirements.
E. HEARING
The trial court held a hearing on Arlington's petition. Arlington argued that a person should not be permitted to make a misrepresentation to gain the benefit of a contract and then use that misrepresentation to invalidate the contract. Husband and Daughter argued that Arlington "could have gone directly to [Wife], and, in fact, was required under regulation to do so if she was capable of signing." Arlington asserted that in Husband and Daughter's complaint they alleged Wife lacked legal capacity at all times relevant to the case (§ 352), therefore, it was not reasonable to argue that Arlington should have had Wife sign the arbitration agreements.
Husband and Daughter argued that Arlington bears the burden of proving there was a valid and enforceable arbitration agreement. Husband and Daughter asserted Arlington could only meet that burden by demonstrating that, prior to admission to Arlington, Wife gave Husband her power of attorney. Husband and Daughter contended that Arlington had no such evidence. The trial court took the matter under submission.
F. RULING
The trial court found (1) Husband did not have legal authority to act as Wife's legal representative, e.g., there was no document giving Husband Wife's power of attorney, and (2) it was not proven that Husband was Wife's ostensible agent. Therefore, the trial court concluded there was not a valid arbitration agreement on behalf of Wife. As a result, the causes of action brought in the capacity of Wife's successors-in-interest could not be transferred to arbitration.
Additionally, the trial court found (3) Husband executed the arbitration agreement in his individual capacity and was bound by that agreement, and (4) Daughter did not sign the arbitration agreements and was not bound by the agreements. The trial court concluded it would not split the wrongful death cause of action and would not risk conflicting rulings. (§ 1281.2, subd. (c).) Therefore, the trial court concluded the entire case, with Husband as a party, would proceed in the trial court. The court denied Arlington's petition to compel arbitration.
DISCUSSION
A. ARBITRATION AGREEMENT
1. PROCEDURE
"[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcement—either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation [citation]—that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense." (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)
2. ENFORCEABLE AGREEMENT
a. Law
"It is essential to the existence of a contract that there should be: [¶] 1. Parties capable of contracting; [¶] 2. Their consent; [¶] 3. A lawful object; and [¶] 4. A sufficient cause or consideration." (Civ. Code, § 1550.) The trial court found there were not two parties capable of contracting and, thus, there was not an enforceable agreement. Specifically the trial court found Husband did not act as Wife's agent.
"Agency 'can be established either by agreement between the agent and the principal, that is, a true agency [citation], or it can be founded on ostensible authority, that is, some intentional conduct or neglect on the part of the alleged principal creating a belief in the minds of third persons that an agency exists, and a reasonable reliance thereon by such third persons." [Citations.] " ' "The principal must in some manner indicate that the agent is to act for [her], and the agent must act or agree to act on [her] behalf and subject to [her] control." . . .' [Citations.] Thus, the 'formation of an agency relationship is a bilateral matter. Words or conduct by both principal and agent are necessary to create the relationship.' " ' " (Warfield v. Summerville Senior Living, Inc. (2007) 158 Cal.App.4th 443, 448, italics omitted.)
b. Standard Of Review
We examine whether there is substantial evidence to support the trial court's finding that Husband was not Wife's agent. (Baxter v. Genworth North America Corporation (2017) 16 Cal.App.5th 713, 722.) " 'Applying the substantial evidence test on appeal, we may not reweigh the evidence, but consider that evidence in the light most favorable to the trial court, indulging in every reasonable inference in favor of the trial court's findings and resolving all conflicts in its favor. [Citations.] The question on appeal is whether the evidence reveals substantial support—contradicted or uncontradicted—for the trial court's conclusion . . . . We uphold the trial court's findings unless they so lack evidentiary support that they are unreasonable." ' " (City of Crescent City v. Reddy (2017) 9 Cal.App.5th 458, 466.)
The arbitration agreements delegate the issue of enforceability to the arbitrator. (See Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 241-242 [discussing delegation clauses].)
c. Contention
Arlington contends the trial court erred by finding Husband was not Wife's actual or ostensible agent. Husband and Daughter are not identically situated for purposes of this contention, therefore, we address the assertion in two parts—one section for Daughter and one section for Husband.
d. Daughter
i. Actual Agent
Daughter submitted Husband's declaration. In the declaration, Husband declared that, to his knowledge, Wife has never executed a power of attorney naming anyone to act as her legal agent. Daughter's evidence that Husband did not have authority to act as Wife's legal agent is substantial evidence supporting the trial court's finding that Husband was not capable of contracting on Wife's behalf as an actual agent. Accordingly, the trial court's finding is supported by substantial evidence.
ii. Ostensible Agent
We now examine ostensible agency. In Husband's declaration, he declared, "On May 30, 2016, I was present when my wife was admitted to Arlington . . . . My wife was lucid at that time, and able to carry on a meaningful conversation." Husband explained that he left his Wife's bedside, went to an office to sign the paperwork that included the arbitration agreement, and then quickly returned to Wife's bedside.
Based upon this evidence, the trial court could reasonably infer that Wife did not know Husband signed an arbitration agreement on her behalf because there is nothing indicating Wife was told that Husband signed arbitration agreements for her; that Wife saw the arbitration agreements; or that Wife was present in the room when the arbitrations agreements were signed. As a result, there is no act from Wife indicating her approval of Husband serving as her agent. Further, any silence on Wife's part cannot be understood as permission for Husband to act as her agent because it can be reasonably inferred that Wife had no knowledge of the arbitration agreements. Accordingly, Husband's declaration provides substantial evidence from which the trial court could find Husband was not Wife's ostensible agent.
iii. Conclusion
Substantial evidence supports the trial court's finding that Husband was not Wife's actual or ostensible agent. As a result, Daughter, as Wife's successor-in-interest, is not bound by the arbitration agreements.
e. Husband
i. Equity
We now examine the contention as it relates to Husband. "A proceeding to compel arbitration is in essence a suit in equity to compel specific performance of a contract." (Freeman v. State Farm Mut. Auto Ins. Co. (1975) 14 Cal.3d 473, 479.) The equitable doctrine of unclean hands will bar relief for those who come to a court of equity having acted dishonestly in relation to the matter before the court. (Katz v. Karlsson (1948) 84 Cal.App.2d 469, 474-475.)
The focus of the unclean hands defense " 'is the equities of the relationship between the parties, and specifically whether the unclean hands affected the transaction at issue. [Citations.]' . . . 'The misconduct that brings the unclean hands doctrine into play must relate directly to the cause at issue. . . . The misconduct must " ' "prejudicially affect . . . the rights of the person against whom the relief is sought so that it would be inequitable to grant such relief." ' " ' " (Jade Fashion & CO., Inc. v. Harkham Industries, Inc. (2014) 229 Cal.App.4th 635, 653-654.)
The trial court found Husband did not have the authority to make legal decisions on Wife's behalf. The trial court found Husband signed the arbitration agreements reflecting he was Wife's legal representative. Therefore, Husband misrepresented his authority to Arlington when signing the arbitration agreements. Arlington is seeking specific performance of the arbitration agreements via its petition to compel arbitration. Husband seeks to avoid specific performance by relying on his misrepresentation that he had the authority to act on Wife's behalf. Husband is barred by the doctrine of unclean hands from using his misrepresentation to argue against the enforceability of the arbitration agreements because the misrepresentation goes directly to the cause at issue, i.e., the validity of the arbitration agreements.
Husband contends he did not read the arbitration agreements before signing them. In other words, Husband did not intend to be dishonest. "The doctrine [of unclean hands] does not require the party seeking relief to be guilty of fraud; it is sufficient if he merely acted unconscientiously. (Derosa v. Transamerica Title Ins. Co. (1989) 213 Cal.App.3d 1390, 1396; see also Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 980.) Signing a contract without reading it is negligent conduct. (See Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 232 [it is unreasonable to neglect to read a contract before signing it].)
Assuming Husband twice signed the arbitration agreements without reading them, he was negligent, and his negligent act led to Arlington suffering prejudice. If Husband read the arbitration agreements, he may have asked a question about what legal representation meant or informed Arlington that he was not Wife's legal representative. Due to Husband's negligence, Arlington was led to believe that Husband was Wife's legal representative. Husband's culpable act of signing the arbitration agreements without reading them prejudiced Arlington because Arlington was falsely led to believe it had an arbitration agreement with Wife. In sum, Husband's defense against the petition to compel arbitration, i.e., his defense that he was not Wife's agent, is barred by the doctrine of unclean hands.
ii. Section 1295
Husband contends the arbitration agreements are unenforceable because the statutorily required words are in the wrong place on the arbitration agreements.
We apply the de novo standard of review. (Baxter, supra, 16 Cal.App.5th at p. 722.) "When interpreting statutes, we begin with the plain, commonsense meaning of the language used by the Legislature. [Citation.] If the language is unambiguous, the plain meaning controls." (Voices of the Wetlands v. State Water Resources Control Bd. (2011) 52 Cal.4th 499, 519.) "It is a maxim of statutory interpretation that courts should give meaning to every word of a statute and should avoid constructions that would render any word or provision surplusage." (Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 Cal.4th 1029, 1038.)
Section 1295 provides: "(a) Any contract for medical services which contains a provision for arbitration of any dispute as to professional negligence of a health care provider shall have such provision as the first article of the contract and shall be expressed in the following language: 'It is understood that any dispute as to medical malpractice, that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings. Both parties to this contract, by entering into it, are giving up their constitutional right to have any such dispute decided in a court of law before a jury, and instead are accepting the use of arbitration.'
"(b) Immediately before the signature line provided for the individual contracting for the medical services must appear the following in at least 10-point bold red type:
"NOTICE: BY SIGNING THIS CONTRACT YOU ARE AGREEING TO HAVE ANY ISSUE OF MEDICAL MALPRACTICE DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP YOUR RIGHT TO A JURY OR COURT TRIAL. SEE ARTICLE 1 OF THIS CONTRACT."
The arbitration agreement at issue in this case had the foregoing required language, in red font, above the signature line for the resident. Below that required language and signature for the resident, was the certification language reflecting, "By virtue of [Wife's] consent, instruction and/or durable power of attorney, I hereby certify that I am authorized to act as [Wife's] agent in executing and delivering this Arbitration Agreement. I acknowledge that [Arlington] is relying on this representation. I also acknowledge that pursuant to the terms of this Agreement, any claims that I may assert in my personal capacity that arise out of or relate to the provision of or failure to provide any services (medical or otherwise) or good by [Arlington] to [Wife] or the Admission agreement are governed by this Arbitration Agreement." Husband signed on the signature line below the certification paragraph. The certification was on the same page as the statutorily required language.
Husband and Daughter do not raise an argument concerning the failure to sign this signature line. Therefore, we will assume the lack of signature is of no consequence.
Husband asserts that because there was not a signature line for him directly below the statutorily required language, the arbitration agreement is void. Section 1295, subdivision (e), provides, "Such a contract is not a contract of adhesion, nor unconscionable nor otherwise improper, where it complies with subdivisions (a), (b) and (c) of this section." The plain language of the statute reflects that if a contract for medical services complies with the requirements of the statute, then the arbitration agreement included in that contract cannot be deemed improper. The statute does not indicate that a failure to comply with the statutory mandates will render an arbitration agreement void. In other words, the failure to comply with the statutory mandates opens the door to an argument that the arbitration agreement is voidable as being unconscionable, a contract of adhesion, or otherwise improper, but it does not automatically void the contract. (§ 1295, subd. (e).) As a result, we are not persuaded that the contract is void due to the alleged failure to comply with section 1295.
Husband contends the failure to comply with section 1295 renders the arbitration agreement void because one appellate court concluded the failure to include the statutorily mandated language rendered an arbitration agreement void. (Rosenfield v. Superior Court (1983) 143 Cal.App.3d 198, 200 (Rosenfield).) In Rosenfield, the arbitration agreement did not contain the mandatory advisements of section 1295. (Rosenfield, at p. 200.) The trial court, in Rosenfield, concluded, as we have here, that compliance with section 1295 shields the agreement "from attack on grounds of adhesion, unconscionability or 'other impropriety,' " but the failure to comply does not render the agreement invalid, rather, it opens the agreement to attack. (Rosenfield, at pp. 201-202.)
The appellate court gave the following analysis: "The Legislature has specified the manner in which the communication of significant contractual consequences must be made to a patient. A clear understanding of those consequences assures the enforceability of the agreement. 'The enforceability of such a contract . . . depends upon whether the terms are beyond the reasonable expectations of an ordinary person . . . .' [Citation.] If an arbitration agreement does not contain the warnings prescribed in section 1295, factual issues are then created concerning the parties' reasonable expectations and whether the contract is in fact oppressive or unconscionable." (Rosenfield, supra, 143 Cal.App.3d at pp. 202-203.)
The appellate court continued, "[R]eal party in interest contends . . . compulsory arbitration provisions are enforceable unless proven by the patient to be adhesive or unconscionable. We disagree. The Legislature has in other areas of consumer protection enacted statutes requiring otherwise valid contracts to comply with formal advisory requirements in order to be enforceable." (Rosenfield, supra, 143 Cal.App.3d at p. 203.)
We agree with the sentence of the analysis in which the appellate court wrote, "If an arbitration agreement does not contain the warnings prescribed in section 1295, factual issues are then created concerning the parties' reasonable expectations and whether the contract is in fact oppressive or unconscionable." (Rosenfield, supra, 143 Cal.App.3d at p. 203.) The failure to comply with section 1295 opens the door for the party opposing arbitration to attack the agreement as voidable due to being a contract of adhesion as unconscionable, or as otherwise improper. (§ 1295, subd. (e).) However, the failure to comply with section 1295 does not cause the agreement to be automatically void. Thus, we disagree with the conclusion of Rosenfield.
iii. Health and Safety Code section 1599.81
Husband contends the arbitration agreements are unenforceable because they do not comply with Health and Safety Code section 1599.81.
Health and Safety Code section 1599.81 concerns contracts for admission into nursing facilities. (Health & Saf. Code, §§ 1599.61, subd. (a), 1599.81, subd. (a).) Health and Safety Code section 1599.81 provides, "(b) All arbitration clauses shall be included on a form separate from the rest of the admission contract. This attachment shall contain space for the signature of any applicant who agrees to arbitration of disputes. [¶] (c) On the attachments, clauses referring to arbitration of medical malpractice claims, as provided for under Section 1295 of the Code of Civil Procedure, shall be clearly separated from other arbitration clauses, and separate signatures shall be required for each clause."
Article I of the arbitration agreement sets forth the recitals. Article I, clause 1, concerned the arbitration of medical malpractice disputes. Article I, clause 2, concerned the arbitration of all other disputes. Article I, clause 1, did not have a separate signature line. Husband asserts the failure to comply with Health and Safety Code section 1599.81 causes the arbitration agreements to be confusing and "unenforceable as a matter of law."
Health and Safety Code section 1599.81 is silent concerning the effect of failing to comply with its mandates. Code of Civil Procedure Section 1281 provides, "A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract." "In other words, . . . an arbitration agreement may only be invalidated for the same reasons as other contracts." (Armendariz v. Foundation Heal Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98.) Generally applicable contract defenses are fraud, duress, and unconscionability. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.)
A failure to comply with Health and Safety Code section 1599.81 is not a defense that is applicable to contracts in general. Accordingly, we are not persuaded that a failure to comply with the statute automatically voids an arbitration agreement. Rather, the failure to comply with the statutory requirements causes an arbitration agreement to be open to attack as being voidable by the typical contract defenses, such as unconscionability or adhesion. In other words, the lack of compliance does not automatically render an arbitration agreement void, but it does permit a party to argue that the contract is voidable due to being unconscionable or being a contract of adhesion.
Husband cites to Malek v. Blue Cross of California. (Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44 (Malek).) Malek concerns the failure to comply with the arbitration disclosure requirements of Health and Safety Code section 1363.1, which "requires health care service plans to disclose in clear and understandable language, appearing 'as a separate article' and 'prominently displayed on the enrollment form' 'immediately before the signature line' that the plan requires binding arbitration of any dispute, and that both parties are giving up their constitutional right to have the dispute decided in a court of law." (Id. at p. 50.)
In Malek, the appellate court concluded that the failure to comply with the statutory requirements rendered the arbitration agreement unenforceable. (Malek, supra, 121 Cal.App.4th at p. 63.) The appellate court explained that the requirements of Health and Safety Code section 1363.1 are mandatory, which means the requirements "must be satisfied in order to arbitrate disputes involving a health care service plan." (Malek, at p. 65.) The appellate court concluded, "Accordingly, even though [Health and Safety Code] section 1363.1 is silent on the effect of noncompliance, because the disclosure requirements are mandatory, the failure to comply with those requirements renders an arbitration provision unenforceable." (Ibid.)
We do not find the Malek reasoning to be persuasive. The United States Supreme Court has explained that arbitration agreements may be invalidated by the typical contract defenses but may not be invalidated "by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." (AT&T Mobility LLC v. Concepcion, supra, 563 U.S. at p. 339.) If the failure to comply with Health and Safety Code section 1599.81 were a defense in and of itself, then it would be a defense peculiar to nursing home arbitration agreements. Such a defense should not exist because arbitration agreements should be on equal footing with contracts in general, in terms of defenses. Accordingly, the reasoning of Malek does not persuade this court that failing to comply with Health and Safety Code section 1599.81 automatically renders an arbitration agreement void.
iv. Fraud in the Execution
This court asked the parties if Husband's misrepresentation concerning his authority to act on Wife's behalf constituted fraud in the execution, such that the arbitration agreements would be void. Fraud in the execution " ' "goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking, and [the contract] is void. In such a case [the contract] may be disregarded without the necessity of rescission." ' " (Rosenthal v. Great Western Fin. Securities Corp., supra, 14 Cal.4th at p. 415, italics omitted.) Husband responded by asserting fraud in the execution does not apply in this case. Accordingly, we will not address it further.
v. Binding Heirs
Arlington asserts that, because Husband is bound by the arbitration agreements, Daughter is also bound in that a parent can bind a non-signatory child/heir to an arbitration agreement.
Patients who sign arbitration agreements can bind their heirs in wrongful death actions. (Ruiz v. Podolsky (2010) 50 Cal.4th 838, 849.) For example, an arbitration agreement that reads, " '[T]his agreement binds all parties whose claims may arise out of or relate to treatment or service provided by the physician including any spouse or heirs of the patient and any children, whether born or unborn, at the time of the occurrence giving rise to the claim,' " is effective in binding the patient's heirs. (Id. at pp. 841-842, 849, 854.)
The arbitration agreements in the instant case provide, "This Arbitration Agreement binds the parties hereto, including the heirs, representative, executors, administrators, successors, and assigns of such parties whose claims may arise out of or relate to any services (medical or otherwise) or goods provided by the Facility or the Admission Agreement."
As explained ante, substantial evidence supports the trial court's finding that the arbitration agreements are unenforceable because there were not two parties capable of contracting. Thus, there is not a valid agreement by which Daughter can be bound as an heir. Accordingly, we find Arlington's argument to be unpersuasive.
f. Conclusion
Husband, who is barred by the doctrine of unclean hands from relying on his misrepresentation to void the arbitration agreement, is bound by the arbitration agreement. Thus, Husband's successor-in-interest causes of action are subject to arbitration. The trial court ruled that Husband's claims, brought in his individual capacity, are subject to arbitration. Husband has not filed a cross-appeal to dispute that ruling.
We have concluded ante that substantial evidence supports the trial court's finding that Husband was not Wife's actual or ostensible agent, and therefore, Daughter's successor-in-interest claims are not subject to arbitration. Husband and Daughter jointly brought the successor-in-interest causes of action, which include (1) elder abuse; (2) breach of contract; and (3) regulatory violations. Husband and Daughter both assert they are Wife's successors-in-interest. (§ 377.32.)
There is no argument that the trial court erred by not appointing a special administrator. (§ 377.33; In re A.C. (2000) 80 Cal.App.4th 994, 1003.) Accordingly, we do not address that issue. --------
B. SEPARATE FORUMS
1. CALIFORNIA LAW
Arlington contends the trial court erred by ordering the entire case remain in the trial court.
California law favors arbitration; however, there are some exceptions to that rule. One exception occurs when there is "pending litigation with a third party [that] creates the possibility of conflicting rulings on common factual or legal issues. [Citation.] [¶] The third-party litigation exception applies when (1) '[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party'; (2) the third-party action 'aris[es] out of the same transaction or series of related transactions'; and (3) 'there is a possibility of conflicting rulings on a common issue of law or fact.' [Citation.] If all three of these conditions are satisfied, then section 1281.2(c) grants a trial court discretion to either deny or stay arbitration despite an agreement to arbitrate the dispute." (Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 967-968 (Acquire).) We apply the de novo standard of review in determining if the three criteria are met in this case. (Id. at p. 972.)
First, Husband and Daughter are both parties to the instant case. Husband is a party to the arbitration agreements. Daughter is not a party to the arbitration agreements. Therefore, Husband, who is a party to the arbitration agreements, is also a party to a pending court action with a third party, i.e., Daughter, who is not a party to the arbitration agreements.
Second, Husband and Daughter brought this case together. They have jointly brought the causes of action. Their dispute is based upon the same allegations concerning Wife's stay at Arlington. Accordingly, Daughter's dispute arises out of the same transaction as Husband's dispute.
Third, there is a risk of a conflicting ruling on a common issue of law or fact because the arbitrator could conclude a breach of contract occurred, while the trier of fact in the trial court might find a breach of contract did not occur. The same issues would be brought before different triers of fact and they could reach different results. Accordingly, all three criteria for the third party exception are met in this case.
We examine whether the trial court abused its discretion by denying arbitration in this case. (Acquire, supra, 213 Cal.App.4th at p. 971.) Given the many common issues between Husband's and Daughter's disputes—the same facts, the same causes of action, and the difficulties involved in trying nearly identical disputes in different forums, the trial court acted within the bounds of reason by denying the petition for arbitration in this case.
2. FEDERAL ARBITRATION ACT
The arbitration agreements include the following provision: "As this Agreement relates to the Resident's admission in the Facility, and the Facility, among other things, participates in the Medicare and/or Medi-Cal programs and/or procures supplies from out-of-state vendors, the parties acknowledge and agree that the Resident's admission and these other events evidence transactions affecting or involving interstate commerce governed by the Federal Arbitration Act. This Agreement shall be construed and enforced in accordance with and governed by the Federal Arbitration Act and the procedures set forth in the Federal Arbitration Act shall govern any petition to compel arbitration."
In the arbitration agreements, the parties agreed that any petition to compel arbitration would be governed by the Federal Arbitration Act. "The Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) does not include a provision comparable to [Code of Civil Procedure] section 1281.2[ subdivision ](c) and therefore requires courts to enforce written arbitration agreements even if there is pending litigation involving a third party that may result in conflicting rulings." (Acquire, supra, 213 Cal.App.4th at p. 968.) The parties do not contend the trial court erred by applying California law rather than federal law. Accordingly, we have also applied California law.
C. MOTION TO DISMISS
After this court issued a tentative opinion in this case, Arlington filed a request for dismissal of its appeal. (Cal. Rules of Court, rule 8.244(c)(1).) No reason was given for the request. We grant the request for dismissal. (Cal. Rules of Court, rule 8.244(c)(2).)
DISPOSITION
Respondents are awarded their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1)&(2).) The appeal is dismissed. (Cal. Rules of Court, rule 8.244(c)(2).)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MILLER
J. We concur: RAMIREZ
P. J. McKINSTER
J.