IN THE SUPREME COURT OF MISSISSIPPI
NO. 2006-CA-00169-SCT
GRENADA LIVING CENTER, LLC, COMMUNITY CARE CENTER OF GRENADA, LLC, COMM CARE MISSISSIPPI, JAMES S. WILLIAMS AND JAMES C. LANDERS
v.
CEPHUS COLEMAN, III (SUBSTITUTED FOR ANNE DONALDSON), AS PERSONAL REPRESENTATIVE OF CEPHUS COLEMAN, JR., DECEASED AND ON BEHALF OF THE WRONGFUL DEATH BENEFICIARIES OF CEPHUS COLEMAN, JR., DECEASED
DATE OF JUDGMENT: 01/06/2006 TRIAL JUDGE: HON. C. E. MORGAN, III COURT FROM WHICH APPEALED GRENADA COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: STEVEN MARK WANN MARJORIE SELBY BUSCHING ATTORNEYS FOR APPELLEE: CHARLES E. GIBSON, III GIGI GIBSON NATURE OF THE CASE: CIVIL - PERSONAL INJURY DISPOSITION: AFFIRMED - 07/26/2007 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC.
DIAZ, PRESIDING JUSTICE, FOR THE COURT:
¶1. This case addresses when a person is subject to the Uniform Healthcare Decisions Act
and when a non-signatory is subject to arbitration.
Facts and Proceedings Below ¶2. Cephus Coleman, Jr. was a World War II veteran, paralyzed since eighteen from a
wound suffered in battle. In a wheelchair since his service days, he earned a college degree,
married, had a child, and served as pastor to a church. In 2003, well into his seventies, Mr.
Coleman was living with his half-sister, Anne Donaldson. She needed help caring for him,
and sought a nursing home who would accept the Veterans Administration benefits Cephus
received. Grenada Living Center accepted the VA benefits, and Anne took steps to have Mr.
Coleman become a resident.
¶3. In July of 2003 Mr. Coleman became a resident of Grenada Living Center, and he
passed away on January 22, 2004, while still a resident. After his death, a suit was filed by
Cephus’ son, Cephus Coleman, III, against the nursing home, which responded with the now-
familiar motion to dismiss in favor of arbitration.1 Anne signed the contract for admission
and placed her initials by the arbitration agreement. Coleman, wishing to avoid arbitration,
argued that his father was never a party to the arbitration agreement and therefore could not
have been bound by it.
¶4. At a hearing before the trial, the parties stipulated to several facts which are critical
to our analysis.2 First, it was agreed that when Mr. Coleman was mentally competent when
his half-sister had him placed in the nursing home. Second, Mr. Coleman was not present
when Anne signed the admission agreement and the arbitration agreement. Third, Anne is
Mr. Coleman’s half-sister who did not retain power of attorney, a conservatorship, a
1 Pursuant to 9 U.S.C. § 3, a movant should file a motion to stay proceedings contemporaneously with the motion to compel arbitration. 2 The facts relied upon are those stipulated to by the parties at the second hearing before the trial court.
2 guardianship, or any other legal power over her half-brother. Mr. Coleman later executed
a power of attorney in favor of his half-sister that the parties agreed was not retroactive.
¶5. The memoranda of the parties in the trial court and the hearings before the Grenada
County Circuit Court focused on the issues on which many arbitration cases often turn, such
as whether there was duress in the entering of the contract and if the agreement was
unconscionable. After a review of two memoranda, multiple exhibits, and two hearings on
the subject, the trial court issued a narrow ruling based on basic contract law: that, generally
speaking, a contract is not enforceable against a person unless personally entered into.
Accordingly, the trial court found that no contract existed and Mr. Coleman was not bound
by arbitration.
¶6. Aggrieved, Grenada Living Center appeals, presenting us with one question on
appeal: Is a competent person who was not a signatory to a contract bound by an arbitration
clause contained within that contract?
Standard of Review
¶7. “The grant or denial of a motion to compel arbitration is reviewed de novo.” East
Ford, Inc. v. Taylor, 826 So. 2d 709, 713 (Miss. 2002). We have previously ruled that
lawsuits involving negligence at a nursing home affects interstate commerce, thus invoking
the Federal Arbitration Act. Vicksburg Partners, 911 So. 2d at 515-16.
¶8. The FAA requires a two-step inquiry when scrutinizing an arbitration agreement.
East Ford, 826 So. 2d at 713. First, we must determine if the parties intended to arbitrate
the dispute; if so, we next consider “whether legal constraints external to the parties’
agreement foreclosed the arbitration of those claims.” Mitsubishi Motors Corp. v. Soler
3 Chrysler-Plymouth, 473 U.S. 614, 628 (1985); East Ford at 826 So. 2d at 713. “Under the
second prong, applicable contract defenses available under state contract law such as fraud,
duress, and unconscionability may be asserted to invalidate the arbitration agreement without
offending the Federal Arbitration Act.” Id. at 713; see 9 U.S.C. § 2 (an “agreement in writing
to submit to arbitration an existing controversy . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract”).
Discussion
¶9. To determine if the parties are bound by arbitration, in this case we must first
determine if a contract exists between them. A valid contract must have (1) two or more
contracting parties, (2) consideration, (3) an agreement that is sufficiently definite, (4) parties
with legal capacity to make a contract, (5) mutual assent, and (6) no legal prohibition
precluding contract formation. Rotenberry v. Hooker, 864 So. 2d 266, 270 (Miss. 2003).
In this case we focus on the fourth and fifth factors—whether the parties who executed the
contract had the legal ability to create the contract or assent to the contract.
¶10. Coleman asserts that Anne could not legally bind his father to arbitration because he
was not a party to the contract. In response, Grenada Living Center offers four reasons why
arbitration applies.
¶11. Grenada Living Center asserts that Anne acted as Cephus’ healthcare surrogate, citing
to the Uniform Healthcare Decisions Act. See Miss. Code Ann. § 41-41-203 et seq. (Rev.
2005). This argument was never raised before the trial court in any fashion. We have
“repeatedly held that a trial judge will not be found in error on a matter not presented to the
4 trial court for a decision.” Purvis v. Barnes, 791 So. 2d 199, 203 (Miss. 2001). Accordingly,
this issue is procedurally barred.
¶12. Notwithstanding this procedural bar, we will briefly examine the plain language of
the statute for the sake of guidance. Section 1 of the statute defines the requirements for any
person who wishes to be a surrogate. There are two pre-conditions: “A surrogate may make
a health-care decision for a patient who is an adult or emancipated minor if [1] the patient has
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IN THE SUPREME COURT OF MISSISSIPPI
NO. 2006-CA-00169-SCT
GRENADA LIVING CENTER, LLC, COMMUNITY CARE CENTER OF GRENADA, LLC, COMM CARE MISSISSIPPI, JAMES S. WILLIAMS AND JAMES C. LANDERS
v.
CEPHUS COLEMAN, III (SUBSTITUTED FOR ANNE DONALDSON), AS PERSONAL REPRESENTATIVE OF CEPHUS COLEMAN, JR., DECEASED AND ON BEHALF OF THE WRONGFUL DEATH BENEFICIARIES OF CEPHUS COLEMAN, JR., DECEASED
DATE OF JUDGMENT: 01/06/2006 TRIAL JUDGE: HON. C. E. MORGAN, III COURT FROM WHICH APPEALED GRENADA COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: STEVEN MARK WANN MARJORIE SELBY BUSCHING ATTORNEYS FOR APPELLEE: CHARLES E. GIBSON, III GIGI GIBSON NATURE OF THE CASE: CIVIL - PERSONAL INJURY DISPOSITION: AFFIRMED - 07/26/2007 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC.
DIAZ, PRESIDING JUSTICE, FOR THE COURT:
¶1. This case addresses when a person is subject to the Uniform Healthcare Decisions Act
and when a non-signatory is subject to arbitration.
Facts and Proceedings Below ¶2. Cephus Coleman, Jr. was a World War II veteran, paralyzed since eighteen from a
wound suffered in battle. In a wheelchair since his service days, he earned a college degree,
married, had a child, and served as pastor to a church. In 2003, well into his seventies, Mr.
Coleman was living with his half-sister, Anne Donaldson. She needed help caring for him,
and sought a nursing home who would accept the Veterans Administration benefits Cephus
received. Grenada Living Center accepted the VA benefits, and Anne took steps to have Mr.
Coleman become a resident.
¶3. In July of 2003 Mr. Coleman became a resident of Grenada Living Center, and he
passed away on January 22, 2004, while still a resident. After his death, a suit was filed by
Cephus’ son, Cephus Coleman, III, against the nursing home, which responded with the now-
familiar motion to dismiss in favor of arbitration.1 Anne signed the contract for admission
and placed her initials by the arbitration agreement. Coleman, wishing to avoid arbitration,
argued that his father was never a party to the arbitration agreement and therefore could not
have been bound by it.
¶4. At a hearing before the trial, the parties stipulated to several facts which are critical
to our analysis.2 First, it was agreed that when Mr. Coleman was mentally competent when
his half-sister had him placed in the nursing home. Second, Mr. Coleman was not present
when Anne signed the admission agreement and the arbitration agreement. Third, Anne is
Mr. Coleman’s half-sister who did not retain power of attorney, a conservatorship, a
1 Pursuant to 9 U.S.C. § 3, a movant should file a motion to stay proceedings contemporaneously with the motion to compel arbitration. 2 The facts relied upon are those stipulated to by the parties at the second hearing before the trial court.
2 guardianship, or any other legal power over her half-brother. Mr. Coleman later executed
a power of attorney in favor of his half-sister that the parties agreed was not retroactive.
¶5. The memoranda of the parties in the trial court and the hearings before the Grenada
County Circuit Court focused on the issues on which many arbitration cases often turn, such
as whether there was duress in the entering of the contract and if the agreement was
unconscionable. After a review of two memoranda, multiple exhibits, and two hearings on
the subject, the trial court issued a narrow ruling based on basic contract law: that, generally
speaking, a contract is not enforceable against a person unless personally entered into.
Accordingly, the trial court found that no contract existed and Mr. Coleman was not bound
by arbitration.
¶6. Aggrieved, Grenada Living Center appeals, presenting us with one question on
appeal: Is a competent person who was not a signatory to a contract bound by an arbitration
clause contained within that contract?
Standard of Review
¶7. “The grant or denial of a motion to compel arbitration is reviewed de novo.” East
Ford, Inc. v. Taylor, 826 So. 2d 709, 713 (Miss. 2002). We have previously ruled that
lawsuits involving negligence at a nursing home affects interstate commerce, thus invoking
the Federal Arbitration Act. Vicksburg Partners, 911 So. 2d at 515-16.
¶8. The FAA requires a two-step inquiry when scrutinizing an arbitration agreement.
East Ford, 826 So. 2d at 713. First, we must determine if the parties intended to arbitrate
the dispute; if so, we next consider “whether legal constraints external to the parties’
agreement foreclosed the arbitration of those claims.” Mitsubishi Motors Corp. v. Soler
3 Chrysler-Plymouth, 473 U.S. 614, 628 (1985); East Ford at 826 So. 2d at 713. “Under the
second prong, applicable contract defenses available under state contract law such as fraud,
duress, and unconscionability may be asserted to invalidate the arbitration agreement without
offending the Federal Arbitration Act.” Id. at 713; see 9 U.S.C. § 2 (an “agreement in writing
to submit to arbitration an existing controversy . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract”).
Discussion
¶9. To determine if the parties are bound by arbitration, in this case we must first
determine if a contract exists between them. A valid contract must have (1) two or more
contracting parties, (2) consideration, (3) an agreement that is sufficiently definite, (4) parties
with legal capacity to make a contract, (5) mutual assent, and (6) no legal prohibition
precluding contract formation. Rotenberry v. Hooker, 864 So. 2d 266, 270 (Miss. 2003).
In this case we focus on the fourth and fifth factors—whether the parties who executed the
contract had the legal ability to create the contract or assent to the contract.
¶10. Coleman asserts that Anne could not legally bind his father to arbitration because he
was not a party to the contract. In response, Grenada Living Center offers four reasons why
arbitration applies.
¶11. Grenada Living Center asserts that Anne acted as Cephus’ healthcare surrogate, citing
to the Uniform Healthcare Decisions Act. See Miss. Code Ann. § 41-41-203 et seq. (Rev.
2005). This argument was never raised before the trial court in any fashion. We have
“repeatedly held that a trial judge will not be found in error on a matter not presented to the
4 trial court for a decision.” Purvis v. Barnes, 791 So. 2d 199, 203 (Miss. 2001). Accordingly,
this issue is procedurally barred.
¶12. Notwithstanding this procedural bar, we will briefly examine the plain language of
the statute for the sake of guidance. Section 1 of the statute defines the requirements for any
person who wishes to be a surrogate. There are two pre-conditions: “A surrogate may make
a health-care decision for a patient who is an adult or emancipated minor if [1] the patient has
been determined by the primary physician to lack capacity and [2] no agent or guardian has
been appointed or the agent or guardian is not reasonably available.” Miss. Code Ann. § 41-
41-211(Rev. 2005) (emphasis added). Therefore, a close reading of the statute reveals that
a prerequisite before any other analysis is that a patient may only have a surrogate if they do
not have mental capacity to make decisions and they do not have any other person legally
available to care for them. Sections 2 and 3 of the statute define who may be a surrogate, but
the preconditions of Section 1 must first be met.
¶13. In the case at hand, the parties stipulated that Mr. Coleman was competent, and no
physician had declared him incompetent. In addition, no agent or guardian had been
appointed, and so the first pre-requisite of Section 1 was not met. Accordingly, Mr.
Coleman’s half-sister Anne could not have been his health-care surrogate. Further, it is clear
from the statute that the Legislature intended to create a system whereby a family member
(or other de facto guardian) could tend to the health needs of a loved one when they were
incapacitated. Because Mr. Coleman was not incapacitated, the statutes governing health
care surrogates do not apply.
5 ¶14. The nursing home also asserted that “neither Mississippi, nor Federal Law require a
power of attorney, conservatorship, guardianship or other court-ordered legal authority to
admit a resident to a nursing home.” Grenada Living Center provided no citation of authority
in this section. Accordingly, this argument is barred, as failure to cite any authority in
support of a claim of error precludes this Court from considering the specific claim on
appeal. See Grey v. Grey, 638 So. 2d 488, 491 (Miss. 1994).
¶15. Third, the nursing home argued that Anne’s actions could bind Mr. Coleman through
express agency, or in the alternative, implied agency. As noted above, Grenada Living
Center stipulated before the trial court facts which undercut the theory of express agency,
including stipulating that there was no express grant of agency through a guardianship,
conservatorship, or power of attorney. The trial court found no basis for the nursing home
to simply assume the presence of express agency. As to implied agency, this argument was
never presented to the trial court and therefore is procedurally barred. See Purvis, 791 So.
2d at 203.
¶16. Fourth and last, Grenada Living Center asserts that the family of Cephus should be
bound to the terms and conditions of the arbitration agreement in the contract. In support,
it offers correctly that we have held that non-signatories may be bound by an arbitration
agreement when they are third-party beneficiaries. See Smith Barney, Inc. v. Henry, 775
So. 2d 722, 727 (Miss. 2001) (finding that arbitration clause covered successor to will);
Terminix Intern., Inc. v. Rice, 904 So. 2d 1051, 1058 (Miss. 2004) (wife bound by
arbitration clause in contract signed by her husband despite the fact she did not sign).
6 ¶17. Those cases remain binding precedent, and this case does not stand for the proposition
that non-signatories to a contract containing an arbitration clause can never be bound by
arbitration. Here, the trial court reasoned in accordance with the stipulations of the parties
that “nobody had the authority to speak for Cephus Coleman, Jr. except himself,” and
therefore “there is no binding written contract between Cephus Coleman, Jr. and the nursing
home requiring arbitration.” We find this reasoning persuasive. Any wrongful death
beneficiaries of Cephus can be bound only to the extent he would be bound. Because there
was no contract between Cephus and the nursing home in the first place, no arbitration clause
exists to be enforced against the wrongful death beneficiaries of Cephus.
Conclusion
¶18. The Uniform Healthcare Decisions Act does not apply to those persons who are
competent. In addition, for our Court to review a case, the issues must first be presented to
the trial court.3 We cannot examine that which does not exist, and we must counsel parties
not to “bootstrap” arguments or submit issues that are not properly before the Court.
Accordingly, we affirm the judgment of the Grenada County Circuit Court denying
arbitration.
¶19. AFFIRMED.
3 With some notable exceptions. For instance, subject matter jurisdiction may be raised at any time, even for the first time on appeal. See M.R.A.P. 12(h)(3) (“Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action or transfer the action to the court of proper jurisdiction”); Comment, M.R.A.P. 12 (“Under Rule 12(h)(3) a question of subject matter jurisdiction may be presented at any time . . . [and] may be presented for the first time on appeal”).
7 WALLER, P.J., CARLSON, GRAVES, DICKINSON, RANDOLPH AND LAMAR, JJ., CONCUR. SMITH, C.J., CONCURS IN RESULT ONLY. EASLEY, J., CONCURS IN PART AND IN RESULT. CARLSON, J., SPECIALLY CONCURS WITH SEPARATE WRITTEN OPINION JOINED BY SMITH, C.J., WALLER, P. J., EASLEY, DICKINSON, RANDOLPH AND LAMAR, JJ.
CARLSON, JUSTICE, SPECIALLY CONCURRING:
¶20. While I unhesitatingly join my colleagues in the majority, I deem it necessary to go
a little further concerning our discussion on arbitration. While the majority acknowledges
this Court’s decisions in Smith Barney, Inc. v. Henry, 775 So. 2d 722, 727 (Miss. 2001) and
Terminix International, Inc. v. Rice, 904 So. 2d 1051, 1058 (Miss. 2004), there is more to
our history concerning arbitration cases.
¶21. In Parkerson v. Smith, 817 So. 2d 529 (Miss. 2002), this Court held, inter alia, that
a nonsignatory to a contract containing an arbitration clause, who was not even mentioned
in the arbitration clause, could not gain the benefit of compelling arbitration. Id. at 535.
However, Parkerson generated four separate opinions.4 In the wake of the muddied waters
created by Parkerson, this Court began a course of attempting to lay out with clarity when
parties might or might not be bound by arbitration, beginning with East Ford, Inc. v. Taylor,
826 So. 2d 709 (Miss. 2002), and Russell v. Performance Toyota, Inc., 826 So. 2d 719
(Miss. 2002).
4 Presiding Justice McRae wrote the majority opinion, joined by Justices Diaz, Easley and Graves, and Justice Carlson concurred in result only. Justice Diaz wrote a concurring opinion, joined by Presiding Justice McRae, and Justices Easley and Graves. Justice Cobb wrote a dissenting opinion. Chief Justice Pittman likewise wrote a separate opinion wherein he concurred in part, and dissented in part, and this opinion was joined by Justice Waller, and was joined in part by Justices Cobb and Carlson. Presiding Justice Smith did not participate.
8 ¶22. Without citing all our arbitration cases, and those of the Court of Appeals, which are
by now legion, I focus only on a few of our cases where we have addressed the issue of
nonsignatories in an arbitration setting. I start by citing this Court’s decision in Terminix
International, Inc. v. Rice, 904 So. 2d 1051, 1058 (Miss. 2004) (wife bound by arbitration
clause in contract signed by her husband, although she did not sign the contract). In B. C.
Rogers Poultry, Inc. v. Wedgeworth, 911 So. 2d 483, 491-92 (Miss. 2005), we stated:
[S]tate law principles might provide for the arbitration of disputes between a nonsignatory and a signatory to a contract, where there are allegations of substantially interdependent and concerted misconduct. A non-signatory should have standing to compel arbitration where the non-signatory has a close legal relationship, such as, alter ego, parent/subsidiary, or agency relationship, with a signatory to the agreement. See Terminix Int’l, Inc. v. Rice, 904 So. 2d 1051 (Miss. 2004) (quoting Washington Mut. Fin. Group, LLC v. Bailey, 364 F. 3d 260, 267 (5 th Cir. 2004) (“A nonsignatory party may be bound to an arbitration agreement if so dictated by the ordinary principles of contract and agency.”) See also Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F. 3d 753, 757 (11 th Cir. 1993); J. J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F. 2d 315 (4 th Cir. 1988); Interocean Ship. Co. v. Nat’l Ship. & Trading Corp., 523 F. 2d 527, 539 (2d Cir. 1975).
Id. at 491-92. See also Fradella v. Seaberry, 952 So. 2d 165, 175 (Miss. 2007)
(nonsignatory to contract containing arbitration clause could compel arbitration against
signatory where nonsignatory had certain specified rights and responsibilities to the signatory
under the contract); Adams v. Greenpoint Credit, LLC, 943 So. 2d 703, 708 (Miss. 2006)
(“arbitration agreements can be enforced against nonsignatories if such nonsignatory is a
third party beneficiary” or if the doctrine of equitable estoppel applies); 5 Cleveland v. Mann,
942 So. 2d 108, 119 (Miss. 2006) (decedent’s heirs-at-law in wrongful death action against
5 In Adams, the nonsignatory was found not to be bound by the arbitration agreement. 943 So. 2d at 709.
9 medical providers bound by arbitration agreement signed by decedent); Sullivan v. Protex
Weatherproofing, Inc., 913 So. 2d 256, 260-61 (Miss. 2005) (case involving a global
transaction with several documents found to be integral to the overall transaction –
nonsignatory could compel arbitration against a signatory).
¶23. This list is by no means all-inclusive. I could go on, but trusting that my point is
made, I will stop. Hopefully, my learned colleagues in the majority will react to this separate
opinion by stating that the cases I cite are clearly distinguishable from today’s case. If that
is their reaction, they would be absolutely correct – and that is my point. The cases I cite
today are unquestionably distinguishable from the case sub judice, but I simply felt
compelled to briefly discuss this Court’s history in an area of the law that we have struggled
mightily to clarify over the past five years.
¶24. With this having been said, I unhesitatingly fully concur in the majority’s opinion
based on the specific facts and circumstances peculiar to this particular case.
SMITH, C.J., WALLER, P.J., EASLEY, DICKINSON, RANDOLPH AND
LAMAR, JJ., JOIN THIS OPINION.