Caston v. Woodlands of Shaker Hts.

2024 Ohio 2267

• Court: Ohio Court of Appeals
• Decided: June 13, 2024
• Docket: 113262
• Status: Published

Opinion

[Cite as Caston v. Woodlands of Shaker Hts., 2024-Ohio-2267.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

ELIZABETH ANNE CASTON, : ADMINISTRATOR OF THE ESTATE OF MARY ANN KETER CASTON, : A.K.A. MARY ANN CASTON,

Plaintiff-Appellant, : No. 113262 v. :

THE WOODLANDS OF SHAKER : HEIGHTS, ET AL.,

Defendants-Appellees. :

JOURNAL ENTRY AND OPINION

JUDGMENT: REVERSED AND REMANDED RELEASED AND JOURNALIZED: June 13, 2024

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-23-978066

Appearances:

Plevin & Gallucci Co., L.P.A. and Michael D. Shroge; Flowers & Grube, Paul W. Flowers, and Kendra N. Davitt, for appellant.

Reminger Co., L.P.A., Brian D. Sullivan, Danny C. Egger, and Brianna M. Prislipsky, for appellees. MARY EILEEN KILBANE, J.:

Plaintiff-appellant Elizabeth Ann Caston (“Elizabeth” or

“Administrator/Elizabeth”), Administrator of the Estate of Mary Ann Keter Caston

(“Mary”), appeals the trial court’s September 20, 2023 judgment entry, contending

that the trial court erred when it partially granted the motion to enforce arbitration

filed by defendants-appellees The Woodlands of Shaker Heights (“The

Woodlands”), The Woodlands of Shaker Heights, LLC, CSL Shaker Heights, LLC,

Sonida Senior Living, Inc. (“Sonida”), Dawn Mount (“Mount”), and Romita

Campbell (“Campbell”) (collectively “defendants”). For the following reasons, we

reverse and remand.

Factual and Procedural History

At all relevant times, Mary resided at The Woodlands, an assisted

living community located in Shaker Heights, Ohio, pursuant to a Residence and

Service Agreement (“residence agreement”) executed by Elizabeth — Mary’s

daughter — and The Woodlands. Administrator/Elizabeth, through the complaint

filed in the underlying action, alleged the following roles of the defendants. The

Woodlands of Shaker Heights, LLC, CSL Shaker Heights, LLC, and Sonida owned,

operated, and/or controlled The Woodlands and, therefore, were allegedly

responsible for any actions or inactions of The Woodlands. Mount was the Vice

President of Operations for Sonida and an administrator for The Woodlands and/or

the other corporate entities and directed The Woodlands’ operations to ensure the

facility was staffed and operated in a safe and secure manner. Additionally, the Woodlands employed Campbell as a licensed practical nurse, and Mary was under

Campbell’s care at The Woodlands. Defendants were allegedly responsible for

Mary’s medical care, medical treatment, and safety while she resided at The

Woodlands.

On April 17, 2022, Mary “eloped” from The Woodlands. While

outside the confines of The Woodlands, Mary sustained injuries that resulted in her

death on May 16, 2022.

Almost one year later, on April 14, 2023, the Administrator/Elizabeth

filed a complaint against the defendants purporting claims for negligence, medical

negligence, nursing home negligence, punitive conduct, survivorship, and wrongful

death. On May 23, 2023, defendants filed an amended answer to the complaint that

included a copy of The Woodlands’ residence agreement, including Attachment I, a

Binding Arbitration Agreement (“arbitration agreement”).

On May 30, 2023, the defendants filed a joint motion for judgment

on the pleadings and to enforce the binding arbitration agreement. The motion to

enforce the binding arbitration agreement is the basis of the current appeal and,

thus, we will address only this portion of the motion and not the motion for

judgment on the pleadings. In the motion to enforce arbitration, defendants argued

that Elizabeth, as Mary’s representative, executed the arbitration agreement thereby

agreeing to exclusively resolve disputes — such as those raised in

Administrator/Elizabeth’s complaint — by binding arbitration. The record demonstrates that Elizabeth executed Attachment I, the

arbitration agreement; the signature line states she signed as the “Resident’s

Responsible Party.” Mary was the “resident.” Elizabeth also executed Attachment

G, the Responsible Party Agreement, and Attachment J, the Guarantor Agreement;

Mary did not sign the residence agreement nor any attachments to the document.

Melesia Lovelace signed Attachments G, I, and J on behalf of The Woodlands.

The arbitration agreement states the document is voluntary and not

a condition of admission to The Woodlands. The first paragraph of the arbitration

agreement, which references The Woodlands as “the Community,” reads:

PLEASE READ THIS ARBITRATION AGREEMENT CAREFULLY. YOU HAVE THE RIGHT TO AND THE COMMUNITY RECOMMENDS YOU ASK ANY QUESTIONS YOU HAVE AND CONSULT WITH AN ATTORNEY, FAMILY, AND/OR FRIENDS BEFORE CHOOSING TO SIGN AND ACCEPT THE TERMS AND CONDITIONS OF THIS ARBITRATION AGREEMENT. The Resident and the Community wish to work together to resolve disputes in a timely fashion saving both Parties the time that would be necessary to resolve a matter in a court of law and in a manner that minimizes both of their legal costs. In addition, the Resident and Community wish to resolve disputes in a non-public setting, and arbitration affords privacy that litigation does not. Therefore, in consideration of the mutual promises contained herein, the Community and the Resident hereby agree as follows: * * *

Paragraph 15 of the arbitration agreement states:

SIGNING BY OTHER THAN RESIDENT. If this Arbitration Agreement is signed by an individual holding him or herself out as a representative of the Resident, by signing below he or she represents and warrants that he or she holds the appropriate authority that meets all requirements under law or equity to enter into this Binding Arbitration Agreement on behalf of the Resident. Community is relying on this representation as its basis for entering into this Residence and Service Agreement and Arbitration Agreement. The Responsible Party agrees that a contract is being formed between the Community and the Responsible Party and the direct benefit of the contract is the care and services the Resident will receive under the contract. The Responsible Party understands that by signing this contract on behalf of the Resident, a contract is being formed between the Community and the Resident.

Further, the last paragraph of the arbitration agreement reads:

By signing this Arbitration Agreement, the Resident is acknowledging that he/she understands the following: (1) the Resident has had the opportunity to, and has, carefully read this Arbitration Agreement; (2) the Resident has had the opportunity to discuss this Arbitration Agreement with an attorney of his/her choice and fully understands its terms and conditions; (3) the Resident has the legal capacity (or, in the case of execution by the Resident’s agent or Representative, the legal authority) to execute this Agreement; (4) the Arbitration Agreement may not be submitted to Resident when Resident’s condition prevents him/her from making a rational decision whether to agree; and (5) nothing in this Agreement shall prevent the Resident or any other person from reporting alleged violations of law to the Facility, or the appropriate administrative, regulatory or law enforcement agency.

The defendants’ motion to enforce arbitration was fully briefed and,

on September 20, 2023, the trial court granted the motion to enforce the arbitration

agreement as to the survivorship claim only.1 The case was stayed and removed

from the trial court’s active docket pending resolution of the survivorship claim.

On October 12, 2023, Elizabeth filed a timely notice of appeal

presenting a single assignment of error: “The trial court erred as a matter of law by

staying the action pending arbitration of the survivorship claim.”

1 In the same judgment entry, the trial court also denied the defendants’ motion

for judgment on the pleadings. As was stated previously, the motion for judgment on the pleadings is not a subject of this appeal. We note that The Woodlands did not appeal the portion of the trial court’s order that denied its motion to enforce the arbitration agreement on the wrongful-death claim. Legal Analysis

The Administrator/Elizabeth appeals the trial court’s grant of the

defendants’ motion to enforce arbitration that stayed the case pending arbitration

of the survivorship claim. Specifically, the Administrator/Elizabeth argues that the

trial court erred because (1) the residence agreement and attachments did not

adequately identify the parties to the agreement; (2) Elizabeth lacked authority to

sign the residence agreement and attachments on behalf of Mary; or (3) the

arbitration agreement was unconscionable. We find Elizabeth’s authority to execute

the arbitration agreement is dispositive of this appeal and, therefore, we will first

address that argument.

Generally, we review a trial court’s decision to grant a stay pending

arbitration under an abuse-of-discretion standard. Scott v. Kindred Transitional

Care & Rehab., 8th Dist. Cuyahoga No. 103256, 2016-Ohio-495, ¶ 4; see

Broughsville v. OHECC, LLC, 9th Dist. Lorain No. 05CA008672, 2005-Ohio-6733,

¶ 16. “However, because arbitration is a matter of contract, before a party can be

bound by the terms of an arbitration agreement, there must be an agreement that

explicitly requires the arbitration of the parties’ dispute.” Scott at ¶ 4, citing AT&T

Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 648-649, 106

S.Ct. 1415, 89 L.Ed.2d 648 (1986). We review matters of law and contract

interpretation de novo. St. Marys v. Auglaize Cty. Bd. of Commrs., 115 Ohio St.3d

387, 2007-Ohio-5026, 875 N.E.2d 561, ¶ 38, citing Nationwide Mut. Fire Ins. Co. v.

Guman Bros. Farm, 73 Ohio St.3d 107, 108, 652 N.E.2d 684 (1995). The issue presented here — whether Elizabeth had apparent authority to execute the

arbitration agreement — is subject to a de novo standard of review. See N. Park

Retirement Community Ctr., Inc. v. Sovran Cos., 8th Dist. Cuyahoga No. 96376,

2011-Ohio-5179, ¶ 7 (“[A]ppellate courts must review questions of arbitrability

under the de novo standard of review applied to contracts.”); see Primmer v.

Healthcare Industries Corp., 2015-Ohio-4104, 43 N.E.3d 788, ¶ 9 (4th Dist.)

(whether the execution of a power of attorney authorized the agent to bind the

principal to an arbitration agreement is subject to a de novo review).

The Ohio General Assembly and Ohio courts recognize that public

policy favors arbitration. R.C. Chapter 2711; Williams v. Aetna Fin. Co., 83 Ohio

St.3d 464, 471, 700 N.E.2d 859 (1998). In support of this position, the Ohio

Supreme Court has stated:

“‘Arbitration is favored because it provides the parties thereto with a relatively expeditious and economical means of resolving a dispute.’” Schaefer v. Allstate Ins. Co. (1992), 63 Ohio St.3d 708, 712, 590 N.E.2d 1242, quoting Mahoning Cty. Bd. of Mental Retardation & Dev. Disabilities v. Mahoning Cty. TMR Edn. Assn. (1986), 22 Ohio St.3d 80, 83, 22 OBR 95, 488 N.E.2d 872. Arbitration also has the additional benefit of unburdening crowded court dockets. Mahoning Cty. Bd. of Mental Retardation, 22 Ohio St.3d at 83, 22 OBR 95, 488 N.E.2d 872. In light of the strong presumption favoring arbitration, all doubts should be resolved in its favor. Ignazio v. Clear Channel Broadcasting, Inc., 113 Ohio St. 3d 276, 2007 Ohio 1947, P18, 865 N.E.2d 18.

Hayes v. Oakridge Home, 122 Ohio St.3d 63, 2009-Ohio-2054, 908 N.E.2d 408,

¶ 15. However, prior to binding a party to an arbitration agreement, a valid contract

must exist that explicitly requires arbitration of the parties’ dispute. Scott at ¶ 4,

citing AT&T Technologies, Inc. at 648-649. We must determine whether the trial court correctly determined that

the arbitration agreement was enforceable. We focus our review on whether

Elizabeth had authority to sign the arbitration agreement on behalf of her mother,

Mary. Administrator/Elizabeth contends the defendant offered no explanation of

the authority that allowed Elizabeth to make decisions for Mary. The defendants

argue Elizabeth affirmatively represented herself as having the necessary authority

to execute the arbitration agreement; The Woodlands relied upon this

representation; and Elizabeth is now equitably estopped from challenging the

validity of the arbitration agreement.

“The relationship of principal and agent, and the resultant liability of

the principal for the acts of the agent, may be created by the express grant of

authority by the principal. Absent express agency, the relation may be one of

implied or apparent agency.” Master Consol. Corp. v. Bancohio Natl. Bank, 61 Ohio

St.3d 570, 574, 575 N.E.2d 817 (1991).

A finding of agency by apparent authority or agency by estoppel must be based upon words or conduct by the principal. * * * The assurances of one who assumes to act as an agent of his authority to bind another are not, standing alone, sufficient to prove his agency. The putative agent cannot create apparent agency alone.

Koos v. Storms, 8th Dist. Cuyahoga No. 84260, 2004-Ohio-6020, ¶ 38, citing

Information Leasing Corp. v. Chambers, 152 Ohio App.3d 715, 740, 2003-Ohio-

2670, 789 N.E.2d 1155 (1st Dist.). Mary did not sign any documents upon her admittance to The

Woodlands so she did not expressly consent to the arbitration agreement. To bind

a principal under apparent authority, the evidence must demonstrate:

(1) that the principal held the agent out to the public as possessing sufficient authority to embrace the particular act in question, or knowingly permitted him to act as having such authority, and (2) that the person dealing with the agent knew of those facts and acting in good faith had reason to believe and did believe that the agent possessed the necessary authority.

Master Consol. Corp. at syllabus. This test is presented in the conjunctive so the

failure to establish both parts of the test is fatal to a claim that one acted with

apparent authority. Lang v. Beachwood Pointe Care Ctr., 8th Dist. Cuyahoga No.

100109, 2014-Ohio-1238, ¶ 4.

The acts of the principal, not the agent, create apparent authority.

Scott, 8th Dist. Cuyahoga No. 103256, 2016-Ohio-495, at ¶ 14, citing Master Consol.

Corp. at syllabus. “The principal is responsible for the agent’s acts only when the

principal has clothed the agent with apparent authority and not when the agent’s

own conduct has created the apparent authority.” Ohio State Bar Assn. v. Martin,

118 Ohio St.3d 119, 2008-Ohio-1809, 886 N.E.2d 827, ¶ 41, citing Master Consol.

Corp. at 576-577.

Further, the party asserting the agency has the burden to show

apparent authority exists. Scott at ¶ 15, citing Irving Leasing Corp. v. M & H Tire

Co., 16 Ohio App.3d 191, 195, 475 N.E.2d 127 (2d Dist.1984). This court previously determined, in Scott and Lang, claims of

apparent authority were unfounded where medical facilities relied on the acts of the

agent, rather than the principal, to establish the agent’s authority to bind the

principal to an arbitration agreement. In Scott, we found that a rehabilitation care

resident did not cloak her daughter with the necessary authority to bind the resident

to an arbitration agreement even though the daughter signed all the paperwork as

part of the admission process. The arbitration agreement was not a precondition for

the resident’s admission. Also, there was no evidence that the resident knew of the

arbitration agreement or that the resident held her daughter out as possessing

sufficient authority to bind her to the arbitration agreement. The facility’s insistence

that the daughter sign her name as a power of attorney did not demonstrate the

facility had a good-faith belief that the daughter possessed the necessary authority.

Reliance on the daughter’s act of signing the admission documents to establish

apparent authority was insufficient.

Similarly, in Lang, 8th Dist. Cuyahoga No. 100109, 2014-Ohio-1238,

a nursing home resident’s stepdaughter signed the admission documents —

including an arbitration agreement — as the resident’s “representative.” The

resident subsequently died and the resident’s estate filed a lawsuit against the

nursing home. The nursing home sought to resolve the matter pursuant to the

arbitration agreement and argued the stepdaughter had apparent authority to bind

the resident to the arbitration agreement. This court found no evidence that the

resident held her stepdaughter out at the time of her admission as having authority to execute the admission documents and, specifically, the arbitration agreement.

And the nursing home’s acknowledgment that the resident lacked the mental

capacity to delegate authority to her stepdaughter proved the nursing home did not

have a reasonable belief that the stepdaughter possessed the requisite authority to

bind the resident to the arbitration agreement.

Here, the record does not include a power of attorney or other

documentation that demonstrates Mary expressly appointed Elizabeth as her agent

to sign the arbitration agreement on Mary’s behalf. See Scott, 8th Dist. Cuyahoga

No. 103256, 2016-Ohio-495, at ¶ 8, 10. Thus, Elizabeth’s ability to bind Mary to the

arbitration agreement would have to be based upon apparent authority.

Elizabeth executed the required paperwork upon Mary’s admission to

The Woodlands. The record is silent as to whether Mary knew about the arbitration

agreement, as well as whether Mary and Elizabeth were together when Elizabeth

signed the agreement. The record does not show that Mary held Elizabeth out as

possessing sufficient authority to bind her to the arbitration agreement. Thus, the

defendants cannot prove Mary clothed Elizabeth with authority to act on her behalf,

and they cannot satisfy the first prong of the apparent-authority analysis.

While failure to satisfy the first prong of the analysis is fatal to

defendant’s motion to enforce the arbitration agreement, we also find the record

does not establish the second prong of the apparent-authority analysis: whether

Mary’s acts led the defendants to believe, in good faith, that Elizabeth possessed

authority to bind Mary to the arbitration agreement. Defendants argue that Elizabeth demonstrated her authority to execute the documents when (1) Elizabeth

coordinated Mary’s admission to The Woodlands, and Mary did not complain or

object to her residency at the facility, (2) Elizabeth held herself out as a guardian and

caregiver for Mary, (3) Elizabeth executed the residence agreement and

attachments, and (4) Mary resided at The Woodlands for over a year pursuant to the

documents signed by Elizabeth. These claims were insufficient to create a good-

faith belief that Mary knew of the arbitration agreement prior to its signature and

cloaked Elizabeth with the necessary authority to bind Mary prior to execution of

the agreement. See Templeman v. Kindred Healthcare, Inc., 8th Dist. Cuyahoga

No. 99618, 2013-Ohio-3738, ¶ 23-26.

The defendants’ reliance on Vogt v. Indianspring of Oakley, 1st Dist.

Hamilton No. C-110864, 2012-Ohio-4124, and Alford v. Arbors at Gallipolis, 2018-

Ohio-4653, 123 N.E.3d 305 (4th Dist.), in support of their argument that Elizabeth

has the burden to demonstrate she did not have authority to execute the arbitration

agreement is misguided. This court has stated that the party seeking to demonstrate

apparent authority has the burden to establish the existence of the relationship.

Scott, 8th Dist. Cuyahoga No. 103256, 2016-Ohio-495, at ¶ 15, citing Irving Leasing

Corp., 16 Ohio App.3d 191 at 195, 475 N.E.2d 127 (2d Dist.1984) (“[T]he burden of

proving such agency exists rests upon the party asserting the agency.”); see also

Brown v. Extendicare, Inc., 2015-Ohio-3059, 39 N.E.3d 896, ¶ 49 (2d Dist.)

(“[C]ontrary to Vogt, it was [the principal’s] burden to establish the existence of [the

agent’s] apparent authority to act on [the principal’s] behalf.”); Shorter v. Trilogy Healthcare of Allen, II, LLC, N.D.Ohio No. 3:22-cv-357, 2022 U.S. Dist. LEXIS

162419, 5 (Sept. 8, 2022), citing Nee v. State Industries, 2013-Ohio-4794, 3 N.E.3d

1290, ¶ 63 (8th Dist.), and Shorter at 7, quoting Gardner Plumbing, Inc. v. Cottrill,

44 Ohio St.2d 111, 113, 338 N.E.2d 757 (1975) (Vogt and Alford “turn on its head the

general and well-established principal that ‘the burden of proving the agency . . . [is]

upon the party who asserts it.’”); and Simmons v. Extendicare Health Servs., Inc.,

5th Dist. Delaware No. 15 CAE 12 0095, 2016-Ohio-4831, ¶ 16 (The party asserting

agency carries the burden to establish apparent authority.). The defendants bore

the burden to establish the existence of Elizabeth’s apparent authority.

We also note that defendants’ claim that Elizabeth was estopped from

challenging her authority to execute the arbitration agreement is without merit.

Pursuant to equitable estoppel, a principal, in certain circumstances, may be liable

for the acts of her agent that exceed the scope of the agent’s apparent authority.

Jefferson Place Condominium Assn. v. Naples, 125 Ohio App.3d 394, 401, 708

N.E.2d 771 (7th Dist.1998), citing Logsdon v. Main-Nottingham Invest. Co., 103

Ohio App. 233, 234, 141 N.E.2d 216 (2d Dist.1956). However, equitable estoppel is

moot if no agency relationship was created authorizing the purported agent to act

on behalf of the principal. Briskey v. KAF Properties LLC, 2019-Ohio-4563, 147

N.E.3d 1230, ¶ 37 (5th Dist.). Elizabeth’s lack of apparent authority to execute the

arbitration agreement renders the defendants’ claim of equitable estoppel moot.

Additionally, the defendants’ claim of implied authority is

inapplicable to the instant matter. Implied authority stems from express authority. Republic Waste Servs. of Ohio Hauling v. Pepper Pike Properties, 8th Dist.

Cuyahoga No. 81525, 2003-Ohio-1348, ¶ 20 (implied authority is incidental and

necessary for an agent to complete the acts expressly conferred by the principal).

Absent express authority granted to Elizabeth, the facts do not give rise to implied

authority.

Based upon the foregoing analysis, we conclude that the trial court

erred when it found the arbitration agreement binding on the

Administrator/Elizabeth, ordered arbitration of the survivorship claim, and granted

defendants’ motion to stay proceedings. Elizabeth’s assignment of error is

sustained.

Judgment reversed and remanded to the lower court for further

proceedings consistent with this opinion.

It is ordered that appellant recover from appellees costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the

common pleas court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27

of the Rules of Appellate Procedure.

_______________________ MARY EILEEN KILBANE, JUDGE

KATHLEEN ANN KEOUGH, A.J., and EILEEN A. GALLAGHER, J., CONCUR