Annette Wiley, Individually and as Administratrix and Personal Representative of the Estate of Charlotte Blair v. Masonic Homes of Kentucky, Inc. D/B/A Masonic Home of Louisville

• Court: Kentucky Supreme Court
• Decided: June 13, 2024
• Docket: 2023-SC-0249
• Status: Published

Opinion

RENDERED: JUNE 13, 2024 TO BE PUBLISHED

Supreme Court of Kentucky 2023-SC-0249-DG

ANNETTE WILEY, INDIVIDUALLY AND AS APPELLANTS ADMINISTRATRIX AND PERSONAL REPRESENTATIVE OF THE ESTATE OF CHARLOTTE BLAIR; AND MELANIE JOY PERSSON

ON REVIEW FROM COURT OF APPEALS V. NO. 2021-CA-0544 JEFFERSON CIRCUIT COURT NO. 20-CI-004734

MASONIC HOMES OF KENTUCKY, INC. APPELLEE D/B/A MASONIC HOME OF LOUISVILLE

OPINION OF THE COURT BY CHIEF JUSTICE VANMETER

REVERSING AND REMANDING

In matters of statutory interpretation, no statute is construed to be

retroactive “unless expressly so declared.” KRS 446.080(3). In this case, a

power of attorney executed by Charlotte Blair in 2019 was not signed in the

presence of two disinterested witnesses as then required by statute. Following

her June 2020 death, the legislature amended the statute to remove the two-

witness requirement. The issue we resolve in this case is whether the legislature’s 2020 amendment to KRS 1 457.050 may be construed as

retroactive so as to validate Ms. Blair’s 2019 power of attorney and, thereby,

the contracts executed by her attorney in fact pursuant to that power of

attorney. We hold that the statute is not given retroactive effect, and therefore

reverse the Court of Appeals’ opinion. We remand this matter to the Jefferson

Circuit Court for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

In April 2019, Blair executed a durable power of attorney (“POA”)

appointing her daughter, Annette Wiley, as her attorney in fact. The POA was

notarized. Despite having entry lines for two witnesses, it was not signed by

two witnesses. In December 2019, Blair was admitted to Masonic’s long-term

care facility, the Sam Swope Care Center. Wiley, purportedly as agent, signed

the admission documents along with an alternative dispute resolution (“ADR”)

agreement which provided claims arising from Blair’s time at the facility were

to be resolved through mediation or arbitration, as needed. Blair resided at the

facility until her death in June 2020.

Prior to execution of Blair’s POA, the legislature enacted KRS Chapter

457, including KRS 457.050, effective in July 2018, 2 to require execution of a

POA “in the presence of two (2) disinterested witnesses.” KRS 457.050(1)

(2018). Two years later, in July 2020, the legislature amened KRS 457.050 to

1 Kentucky Revised Statutes.

2 Act of Apr. 26, 2018, ch. 185, 2018 Ky. Acts 1620.

2 remove the two-witness requirement. 3 The amendment was effective July 15,

2020. KY. CONST. § 55.

In August 2020, Wiley, individually and as administratrix and personal

representative of the Blair’s estate, and Melanie Persson, Wiley’s sister and

Blair’s other daughter (collectively “Wiley”), sued Masonic in Jefferson Circuit

Court asserting claims of negligence; wanton, reckless or grossly negligent

conduct; a breach by Masonic Homes of the admission agreement; general

violations of the Kentucky Resident’s Bill of Rights Act; statutory claims for

wrongful death; claims for adult children loss of consortium; and violations of

the Kentucky Consumer Protection Act. Masonic alleged some of those claims

were subject to the ADR agreement and moved to stay the proceedings and

compel arbitration. After a hearing on the validity of the ADR agreement, the

circuit court held the POA was invalid because it failed to meet the

requirements of KRS 457.050 and the 2020 amendment to the statute was not

retroactive. The ADR agreement, therefore, was unenforceable as the

agreement was signed under an invalid power of attorney.

Masonic appealed. In a divided opinion, the Court of Appeals reversed

the circuit court’s order denying Masonic’s motion to compel arbitration. The

Court of Appeals held the POA was valid because another statute, KRS

457.060, provides, in relevant part,

(1) A power of attorney executed in this state on or after July 14, 2018 is valid if its execution complies with KRS 457.050.

3 Act of Mar. 27, 2020, ch. 41 § 42, 2020 Ky. Acts 153.

3 (2) A power of attorney executed in this state before July 14, 2018 is valid if its execution complied with the law of this state as it existed at the time of execution.

KRS 457.060(1)-(2). Because this statute was left unchanged during the 2020

amendments, the Court of Appeals determined that this fact, coupled with the

alteration to KRS 457.050, suggested a clear legislative intent that KRS

457.050 is retroactive to July 14, 2018. Finding that the POA was valid

because KRS 457.050 was retroactive, the Court of Appeals ruled that Wiley

acted within her authority under the POA and arbitration is compelled by

Masonic’s ADR agreement.

Wiley sought discretionary review from this Court, which we granted.

II. STANDARD OF REVIEW

On appeal, the standard of review for statutory construction and a trial

court’s application of law on a motion to compel arbitration is de novo. Pearce

v. Univ. of Louisville, 448 S.W.3d 746, 749 (Ky. 2014); Ping v. Beverly Enters.,

Inc., 376 S.W.3d 581, 590 (Ky. 2012); see also Genesis Healthcare, LLC v.

Stevens, 544 S.W.3d 645, 649 (Ky. App. 2017) (applying de novo to a trial

court’s denial of a motion to compel arbitration).

III. ANALYSIS

“[A] party seeking to compel arbitration has the initial burden of

establishing the existence of a valid agreement to arbitrate.” Ping, 376 S.W.3d

at 590 (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct.

1920, 131 L.Ed.2d 985 (1995); Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850

(Ky. 2004)). Masonic fails to meet its initial burden in establishing the

4 existence of a valid agreement to arbitrate because the POA was invalid at the

time Wiley signed the ADR agreement.

A. The POA was invalid at execution and at Blair’s admittance.

At common law, the mode by which a principal might appoint an agent

was flexible and a power of attorney would be enforced so long as the

agreement was signed by the principal, or at her direction, and the principal

intended to authenticate the agreement. Ledford v. Hubbard, 219 Ky. 9, 12-15,

292 S.W. 345, 347-48 (1927); Irvin v. Thompson, 7 Ky. (4 Bibb) 295, 297

(1816).

A POA is “a written, often formally acknowledged, manifestation of the

principal’s intent to enter into . . . a relationship with a designated agent.”

Ping, 376 S.W.3d at 591. In 2018, our legislature enacted the first

comprehensive set of laws related to powers of attorney in KRS Chapter 457,

also known as the Uniform Power of Attorney Act (2006), including KRS

457.050. The 2018 version of KRS 457.050 provided:

(1) A power of attorney must be signed in the presence of two (2) disinterested witnesses by the principal or in the principal’s conscious presence by another individual directed by the principal to sign the principal’s name on the power of attorney. If signed in the principal’s conscious presence by another individual, the reason for this method of signing shall be stated in the power of attorney.

(2) A signature on a power of attorney is presumed to be genuine if the principal acknowledges the signature before a notary public or other individual authorized by law to take acknowledgements. (emphasis added).

5 In April 2019, Blair executed a durable POA appointing her daughter,

Wiley as her agent. No party disputes the POA failed to be signed in the

presence of two disinterested witnesses. Pursuant to KRS 457.050 as it existed

at the time and KRS 457.060, 4 the POA was invalid at its execution and

without legal effect.

In December 2019, Wiley, acting under the invalid POA, signed

agreements to admit Blair to Masonic’s long-term care facility. Wiley also used

the POA to sign Masonic’s ADR agreement, which was not a requirement of

Blair’s admission. Had KRS 457.050 remained unchanged, we would have

little difficulty holding that the invalid POA did not bind any of the claims

against Masonic to arbitration. In addition, Blair died before the effective date

of the 2020 amendments. By the time Wiley brought this action, however, KRS

457.050 had been amended and the two-witness requirement eliminated.

B. The 2020 amendments to Chapter 457 were not retroactive.

The law of the Commonwealth states, “[n]o statute shall be construed to

be retroactive, unless expressly so declared.” KRS 446.080(3). Several

examples exist of the General Assembly expressly providing retroactive

application in statutes. See e.g. KRS 17.510(6)(b) (“[t]his paragraph shall be

retroactive.”); KRS 61.500 (“any agreement entered into pursuant to it may be

made with retroactive effect to January 1, 1951, or any date thereafter.”); KRS

4 KRS 457.060(1) provided, “(1) A power of attorney executed in this state on or

after July 14, 2018 is valid if its execution complies with KRS 457.050.”

6 161.168(2) (“[t]he provisions of this subsection shall be retroactive to January

1, 2003.”).

However, this Court may construe statutes to have retroactive

application without express declaration when we are “absolutely certain the

legislature intended such a result” or when the substance of the statute is

remedial in nature and no new rights or duties are created. Commonwealth

Dep’t of Agric. v. Vinson, 30 S.W.3d 162, 168 (Ky. 2000) (emphasis added). For

“[a]ll statutes of this state shall be liberally construed with a view to promote

their objects and carry out the intent of the legislature.” KRS 446.080(1).

Masonic argues several 2020 amendments to Chapter 457 were retroactive

based on the legislature’s intent even though the legislature did not expressly

declare the statutes to be retroactive.

“‘To determine legislative intent, we look first to the language of the

statute, giving the words their plain and ordinary meaning.’” Pearce, 448

S.W.3d at 749 (quoting Richardson v. Louisville/Jefferson Cnty. Metro Gov’t,

260 S.W.3d 777, 779 (Ky. 2008)). “[W]hen a statute is unambiguous, we need

not consider extrinsic evidence of legislative intent and public policy.” Id.

(citing Cnty. Bd. of Educ. v. S. Pac. Co., 225 Ky. 621, 9 S.W.2d 984, 986 (1928)).

“However, if the statutory language is ambiguous, we will look to other sources

to ascertain the legislature's meaning, such as legislative history and public

policy considerations.” Id. (citing MPM Fin. Grp. Inc. v. Morton, 289 S.W.3d 193,

198 (Ky. 2009)). Since July 15, 2020, KRS 457.050 has stated:

7 (1) A power of attorney shall be signed by the principal or in the principal's conscious presence by another individual directed by the principal to sign the principal's name on the power of attorney. If signed in the principal's conscious presence by another individual, the reason for this method of signing shall be stated in the power of attorney. (2) A signature on a power of attorney is presumed to be genuine if the principal acknowledges the signature before a notary public or other individual authorized by law to take acknowledgments.

The language of the statute is clear and unambiguous. No express declaration

of retroactivity exists in KRS 457.050. However, Masonic contends that the

ambiguity of retroactive application as applied to KRS 457.050 can be found in

the broader statutory scheme, specifically in KRS 457.060(1) and KRS 457.460.

1. No absolute certainty of retroactivity for KRS 457.060(1). KRS 457.060(1) states “[a] power of attorney executed in this state on or

after July 14, 2018, is valid if its execution complies with KRS 457.050.”

Unlike the other provisions discussed in this opinion, KRS 457.060 was not

amended in 2020, meaning we are unable to discern definitively whether the

legislature, by its inaction, intended for the 2020 amendment to KRS 457.050

to apply to POAs executed after 2018 or whether the failure to change the date

was merely an oversight. Ultimately, the statutory language is ambiguous

because either the 2018 or 2020 version of KRS 457.050 could apply to KRS

457.060(1). If KRS 457.060(1) applies to the 2018 version of KRS 457.050 then

the POA at issue is invalid. On the other hand, if KRS 457.060(1) applies to

the 2020 version of KRS 457.050 then the POA is valid because Blair, the

principal, signed it and a notary acknowledged her signature.

8 The ambiguity of which version of KRS 457.050 to apply to KRS

457.060(1) leads this Court to look beyond the plain and ordinary meaning of

the words. For this Court to approve retroactive application for KRS 457.060(1)

it must be “absolutely certain” the legislature intended the result. Vinson, 30

S.W.3d at 168. We stated in Shawnee Telecom Resources, Inc. v. Brown, 354

S.W.3d 542, 560 (Ky. 2011), that “[l]egislative inaction [is] … a ‘weak reed upon

which to lean’ and a ‘poor beacon to follow’ in construing a statute.” In order to

determine the legislature’s intent in this case, we look to legislative history and

public policy considerations. Pearce, 448 S.W.3d at 749.

Evidence of legislative intent can be supported from legislative hearings

held prior to the adoption of a law. See Zuckerman v. Bevin, 565 S.W.3d 580

586-87 (Ky. 2018) (referring to legislative hearings supporting economic

benefits of proposed legislation); UPS Airlines v. West, 366 S.W.3d 472, 480-81

(Ky. 2012) (Scott, J., dissenting) (referring to legislative hearings to support

legislature’s intent in enacting a statute). When the Kentucky Senate Judiciary

Committee considered a committee substitute to 2020 House Bill (“HB”) 154,

removing the two-witness requirement in KRS 457.050(1), 5 the following

exchange occurred:

[Opening Remarks]: … the Committee substitute as I understand it … deals with the power of attorney act that was enacted I believe two years ago. That was a uniform act but as enacted it only adopted … part of the act. It only adopted two sections of it and two sections

5 The proposal to KRS 457.050 was: “A power of attorney shall [must] be signed

[in the presence of two disinterested witnesses] by the principal or in the principal’s conscious presence by another individual directed by the principal to sign the principal’s name on the power of attorney.”

9 were not adopted. And in addition, it imposed a requirement of having two witnesses for every power of attorney. Which is very awkward, [] I bought a car three months ago and the power of attorney that I was asked to sign did not comply with the new statute because it is too awkward… [Question]: … Does this bill completely take care of the power of appointment as it applies to POAs? Do we go back to the former method of not requiring two witness signatures, is that in here?

[Answer]: That is correct. That is my understanding, yes.

Hearing on HB 154 in the Kentucky Senate Judiciary Committee, (March 12,

2020) https://ket.org/legislature/archives/2020/regular/senate-judiciary-

committee-162260 at 1:01:20-1:03:34 (last visited May 15, 2024).

The comments made during this hearing support the legislature’s intent

to amend KRS 457.050 to “go back” to the former method of not requiring the

presence of two disinterested witnesses because of the logistical issue or

“awkwardness” it creates in execution. In further support of the legislature’s

intent, several representatives during the hearing voiced approval of the

amendment from the banking, auto, land and title industries. Id. As a public

policy consideration, the hearing helps explain how the legislature intended for

the amendment to help resolve logistical issues created from having to find two

disinterested witnesses present during the execution of a POA. The comments

also suggest the change in the amendment intended to return to the process in

place before the 2018 amendment required the presence of two disinterested

witnesses.

However, whether the legislature intended for the amendment to KRS

457.050 to retroactively make valid all POAs executed between July 14, 2018

10 and July 15, 2020, the 2020 legislation’s effective date, is unclear. The hearing

clearly established that the 2018 version of KRS 457.050 caused problems for

individuals executing POAs across various industries in the Commonwealth.

But no comments were made to suggest that the amendment systematically

makes all POAs on or after July 14, 2018 valid if the POA was executed without

the presence of two disinterested witnesses. Masonic provides no evidence,

outside of the legislature’s inaction in changing the statute, to support the

legislature’s intent to create such a result. As already noted, “[l]egislative

inaction [is] … a ‘weak reed upon which to lean’ and a ‘poor beacon to follow’ in

construing a statute.” Brown, 354 S.W.3d at 560 (citing Brown v. Arp and

Hammond Hardware Co., 141 P.3d. 673, 684 (Wy. 2006) (quoting from Norman

J. Singer, 2B Statutes and Statutory Construction § 49:10, p. 112-115 (6th ed.

2000)). Due to the lack of evidence to support the legislature’s intent, we

cannot be absolutely certain that the legislature intended KRS 457.060(1) to

have retroactive application to make the alleged POA valid.

2. KRS 457.460 cannot retroactively save an already terminated POA. Masonic also argues the 2020 amendment to KRS 457.050(1) is

retroactive because KRS 457.460(1) states “[t]his chapter applies to a power of

attorney created before, on, or after July 15, 2020.” (emphasis added). This

section appears to clearly apply to the POA at issue in this case, as the POA

was executed before July 15, 2020. But the statute also states in another

subsection, “an act done before July 15, 2020, is not affected by this chapter.”

KRS 457.460(4). This subsection also applies to this case because Wiley acted

11 under the authority of the invalid POA by entering into the ADR agreement.

Once again, we face an issue of ambiguity because both KRS 457.460(1) and

KRS 457.460(4) can apply to the POA.

Masonic argues Wiley is prohibited from raising the effect of KRS

457.460(4) on retroactivity because she failed to preserve the argument before

the trial court. Typically, “[a] question not raised nor adjudicated in the circuit

court will not be addressed by this court,” Benefit Ass’n of Ry. Emps. v. Secrest,

239 Ky. 400, 39 S.W.2d 682, 687 (1931), but “[w]hen the facts reveal a

fundamental basis for decision not presented by the parties, [] our duty [is] to

address the issue to avoid a misleading application of the law.” Mitchell v.

Hadl, 816 S.W.2d 183, 185 (Ky. 1991). The effect of KRS 457.460(4) is

instructive in considering retroactive application of KRS Chapter 457 because

it addresses the issue of an application of law.

“In interpreting a statute, ‘[w]e have a duty to accord to words of a

statute their literal meaning unless to do so would lead to an absurd or wholly

unreasonable conclusion.” Univ. of Louisville v. Rothstein, 532 S.W.3d 644, 648

(Ky. 2017) (quoting Cosby v. Commonwealth, 147 S.W.3d 56, 59 (Ky. 2004)).

Here, KRS 457.460(1) applies to the POA because it existed before July 15,

2020. KRS 457.460(4) also applies because the “act” at issue in this case is

Wiley using the authority of the POA to sign the ADR agreement. KRS Chapter

457 does not define the “act” in this context. See KRS 457.020. But it does

define an agent as “a person granted authority to act.” Id. See e.g. Jackson v.

Legacy Health Servs., Inc., 640 S.W.3d 728, 731 (Ky. 2021) (citing Ping, 376

12 S.W.3d 581) (holding a voluntary pre-dispute arbitration agreement not binding

on a ward if the guardian does not have the appropriate authority to enter

agreement). An agent entering an agreement on behalf of a principal is an “act”

under its literal meaning and “as an elementary matter of agency law.” Mr.

Roof of Louisville, LLC v. Estate of Henry, 681 S.W.3d 115, 119 n.8 (Ky. 2023).

We also take note of the words of the statute’s title, “[e]ffect on existing

powers of attorney.” KRS 457.460 (emphasis added). The title is relevant

because the Blair POA did not exist at the time this law was enacted. An

agent’s authority under a durable POA terminates when “[t]he principal dies.”

KRS 457.100. Blair, the principal, died before the passage of the 2020

amendment to KRS 457.460. 6 Any “existing” POA in effect at the time of

execution terminated before KRS 457.460 was amended in 2020. Because the

invalid Blair POA terminated before the 2020 amendment to KRS 457.460

became law, the statute cannot possibly retroactively save the POA. As stated

in KRS 457.460 “[e]xcept as otherwise provided in this chapter” this alleged

POA ceased to exist upon Blair’s death.

In sum, the alleged POA was invalid at its execution under the 2018

version of KRS 457.050. We are not absolutely certain the legislature intended

to retroactively apply KRS 457.060(1) to all existing POAs because not enough

evidence supports such a result. Lastly, the POA is invalid because it was

terminated before the passage of the 2020 version of KRS 457.460 and the

6 Blair died on June 18, 2020, and the 2020 amendment to KRS 457.050

became law on July 15, 2020.

13 statute cannot retroactively save a POA that no longer exists. For these

reasons, no statute in KRS Chapter 457 provides retroactive application to

make this POA valid.

C. Appellants are not estopped from arguing the validity of the POA.

Finally, Masonic argues Wiley is estopped from arguing the validity of the

POA because Wiley signed the optional ADR agreement with the understanding

that she had authority under the POA. Masonic asserts it accepted and relied

on Wiley’s good faith belief that she was Blair’s agent. See KRS 457.140

(requiring an agent to act in the principal’s best interest, in good faith, and only

within the scope of authority granted by the POA). However, Masonic’s

argument fails because it cannot prove a material misrepresentation by Wiley

or Blair in signing the optional ADR agreement.

“[E]quitable estoppel requires both a material misrepresentation by one

party and reliance by the other party.” Ping, 376 S.W.3d at 595 (citing Fluke

Corp. v. LeMaster, 306 S.W.3d 55, 62 (Ky. 2010)). Masonic relied on Wiley’s

signature and understanding that she was Blair’s agent because Masonic

admitted Blair into its facility for care. Although, the ADR agreement was not a

mandatory document to admit Blair into the facility, Wiley signed all the

documents with “POA” next to her signature.

However, Masonic cannot show that “[it] lacked the means of acquiring

knowledge of the truth” that the POA was lacking the required presence of two

disinterested witnesses. LeMaster, 306 S.W.3d at 62. A simple check of the

14 document would show that the POA did not have the witness signatures. 7

Further, Masonic provides no evidence to suggest that Wiley engaged in “any

affirmative conduct to misrepresent or conceal facts.” Id. at 63. The issue in

this case is not a matter of a fraudulent POA but the validity of a POA. Wiley is

not estopped from contesting the validity of the POA.

As a result of this Court’s holding that the POA is invalid, we do not

need to consider the parties’ arguments about the unconscionability of the

arbitration agreement, or whether the wrongful death claim should be stayed

pending arbitration of the other claims.

IV. CONCLUSION

The POA executed in 2019 was invalid because two disinterested

witnesses were not present during execution as required by KRS 457.050 at

the time. Further, no statute in KRS Chapter 457 retroactively applies to make

the POA valid. The POA was invalid when Wiley signed Masonic’s ADR

agreement. Wiley thereby had no authority to enter into the ADR agreement on

behalf of Blair. Thus, we reverse the Court of Appeals’ decision and remand

7 Masonic’s failure to check the signature page of the POA also undercuts its

argument that it did not have actual knowledge of the invalid POA. KRS 457.190 provides that “[a] person that in good faith accepts an acknowledged power of attorney without actual knowledge that the power of attorney is void, invalid, or terminated … may rely upon the power of attorney as if the power of attorney were genuine, valid, and still in effect.” The POA was notarized but clearly lacked the required presence of two disinterested witnesses because the witness signatures were blank. Masonic having knowledge of the notary signature but not knowledge of the lack of witness signatures is unconvincing.

15 this case to the Jefferson Circuit Court for further proceedings consistent with

this Opinion.

All sitting. All concur.

COUNSEL FOR APPELLANTS:

Chadwick Neal Gardner John Carl Grey, II Gardner Law, PLLC

COUNSEL FOR APPELLEE:

Darryl W. Durham Brian Keith Saksefski Seiller Waterman, LLC