RENDERED: JUNE 4, 2021; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals
NO. 2020-CA-0760-MR
PRESBYTERIAN HOMES AND SERVICES OF KENTUCKY, INC.; BRIDGETTE TODD, IN HER CAPACITY AS ADMINISTRATOR OF WESTMINISTER TERRACE; AND PRESBYTERIAN HOMES AND SERVICES FOUNDATION, INC. APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT v. HONORABLE SUSAN SCHULTZ GIBSON, JUDGE ACTION NO. 19-CI-003823
GLENN DEAN, ADMINISTRATRIX OF THE ESTATE OF MATTIE E. HAMPTON, DECEASED APPELLEE
OPINION REVERSING AND REMANDING
** ** ** ** **
BEFORE: COMBS, KRAMER, AND K. THOMPSON, JUDGES.
COMBS, JUDGE: Presbyterian Homes and Services of Kentucky, Inc.;
Presbyterian Homes and Services Foundation, Inc.; and Bridgette Todd, in her capacity as Administrator of Westminster Terrace (referred to collectively as
“Presbyterian Homes”), appeal the denial of their motion to stay proceedings and
compel arbitration. After our review, we reverse and remand.
On March 27, 2018, Mattie Hampton, now deceased, was admitted to
Westminster Terrace, a long-term care facility operated by Presbyterian Homes.
Except for periods of hospitalization, Hampton remained a resident of the care
home until October 12, 2018.
Upon Hampton’s admission to the care home, Hampton’s daughter,
Glenn Dean, executed on her mother’s behalf an agreement to arbitrate “[a]ny and
all claims or controversies arising out of or in any way relating to this Agreement
or Resident’s stay at Facility.” Dean signed the agreement, indicating that she was
the “Legal Representative/Responsible Party.” She gave the care home a copy of
the power-of-attorney document (the POA) that vested Dean with authority over a
wide range of Hampton’s affairs, expressly reciting the authority to make
“[d]ecisions [r]elating to . . . [Hampton’s] institutionalization in a nursing home or
other facility” and the power to “act on [Hampton’s] behalf for the following
purpose[s] . . . [c]laims and [l]itigation.” Execution of the agreement to arbitrate
was not required for Hampton’s admission to the care home. The agreement
provided that it could be rescinded by written notice to the care home within thirty
(30) days of its execution.
-2- On June 21, 2019, as administratrix of Hampton’s estate, Dean filed a
civil action in Jefferson Circuit Court against Presbyterian Homes. Dean alleged
that Presbyterian Homes failed to provide to Hampton the minimum care necessary
for her wellbeing and that it knew that it could not do so. She alleged that the
home’s wrongful conduct caused Hampton to suffer an accelerated deterioration of
health; an unnecessary loss of dignity; extreme pain and suffering; mental anguish;
disability; and death. Presbyterian Homes answered the complaint and denied any
wrongdoing. It also asserted that the action (except for the wrongful death claim)
was prohibited by the terms of the parties’ arbitration agreement.
In January 2020, Presbyterian Homes filed a motion to dismiss the
action or, in the alternative, to compel the alternative dispute resolution process,
staying the wrongful death claim pending resolution of the arbitrable claims. It
relied upon the arbitration agreement signed by Dean on Hampton’s behalf;
Kentucky’s version of the Uniform Arbitration Act, codified at Kentucky Revised
Statutes (KRS) 417.050 et seq.; and the Federal Arbitration Act (FAA), codified at
9 United States Code § 1 et seq. The care home argued that the POA document
gave Dean broad authority over Hampton’s affairs -- specifically encompassing the
power to execute the arbitration agreement on her behalf upon her admission to its
facility.
-3- In her response, Dean contended that the arbitration agreement was
unenforceable for three reasons. First, she lacked necessary authority under the
provisions of the POA to enter into a binding, pre-dispute arbitration agreement on
Hampton’s behalf. Next, the arbitration agreement was not properly authenticated.
And third, the agreement was both procedurally and substantively unconscionable.
The circuit court treated the motion as one for summary judgment and
denied it in an order entered May 8, 2020. Relying on the decision of the Supreme
Court of the United States in Kindred Nursing Centers Ltd. Partnership v. Clark,
___ U.S. ___, 137 S. Ct. 1421, 197 L. Ed. 2d 806 (2017), and the decision of the
Supreme Court of Kentucky upon remand in Kindred Nursing Centers Limited
Partnership v. Wellner, 533 S.W.3d 189 (Ky. 2017), the circuit court concluded
that it could not infer from the authority expressly granted to Dean that she had
power sufficient to bind Hampton to the arbitration agreement. In light of that
conclusion, the court did not address the other arguments presented by Dean to
show that the agreement was unenforceable. This appeal followed.
An order denying a motion to compel arbitration is immediately
appealable. KRS 417.220(1); Conseco Finance Servicing Corp. v. Wilder, 47
S.W.3d 335 (Ky. App. 2001). We review “the trial court’s application of [the law]
de novo, although the trial court’s factual findings, if any, will be disturbed only if
clearly erroneous.” Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581, 590 (Ky.
-4- 2012).
Both Kentucky precedent and national policy favor agreements to
arbitrate. Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850 (Ky. 2004). Similarly,
“[a]rbitration has always been favored by the courts.” Poggel v. Louisville Ry. Co.,
225 Ky. 784, 10 S.W.2d 305, 310 (1928). Nevertheless, a party seeking to compel
arbitration has the initial burden of establishing the existence of a valid agreement
to arbitrate. Ping, supra. Whether a valid agreement exists is determined by
ordinary state-law principles of contract formation. KRS 417.050. However, the
statutory framework of the FAA also impacts the court’s determination whether a
valid arbitration agreement was formed. Kindred Nursing Centers Ltd.
Partnership v. Clark, __ U.S. __, S. Ct. 1421, 1428, 197 L. Ed. 2d 806 (2017) (“By
its terms, then, the [FAA] cares not only about the ‘enforce[ment]’ of arbitration
agreements, but also about their initial ‘valid[ity]’—that is, about what it takes to
enter into them.”)
On appeal, Presbyterian Homes argues that the trial court erred by
refusing to compel arbitration and to stay the wrongful death claim. It contends
that it met its burden of establishing the existence of a valid agreement to arbitrate
because the POA document expressly delegated to Dean the authority to execute
the agreement on Hampton’s behalf. We agree.
-5- In Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015),
rev’d in part, vacated in part by Kindred Nursing Centers Ltd. Partnership v.
Clark, __ U.S.
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RENDERED: JUNE 4, 2021; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals
NO. 2020-CA-0760-MR
PRESBYTERIAN HOMES AND SERVICES OF KENTUCKY, INC.; BRIDGETTE TODD, IN HER CAPACITY AS ADMINISTRATOR OF WESTMINISTER TERRACE; AND PRESBYTERIAN HOMES AND SERVICES FOUNDATION, INC. APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT v. HONORABLE SUSAN SCHULTZ GIBSON, JUDGE ACTION NO. 19-CI-003823
GLENN DEAN, ADMINISTRATRIX OF THE ESTATE OF MATTIE E. HAMPTON, DECEASED APPELLEE
OPINION REVERSING AND REMANDING
** ** ** ** **
BEFORE: COMBS, KRAMER, AND K. THOMPSON, JUDGES.
COMBS, JUDGE: Presbyterian Homes and Services of Kentucky, Inc.;
Presbyterian Homes and Services Foundation, Inc.; and Bridgette Todd, in her capacity as Administrator of Westminster Terrace (referred to collectively as
“Presbyterian Homes”), appeal the denial of their motion to stay proceedings and
compel arbitration. After our review, we reverse and remand.
On March 27, 2018, Mattie Hampton, now deceased, was admitted to
Westminster Terrace, a long-term care facility operated by Presbyterian Homes.
Except for periods of hospitalization, Hampton remained a resident of the care
home until October 12, 2018.
Upon Hampton’s admission to the care home, Hampton’s daughter,
Glenn Dean, executed on her mother’s behalf an agreement to arbitrate “[a]ny and
all claims or controversies arising out of or in any way relating to this Agreement
or Resident’s stay at Facility.” Dean signed the agreement, indicating that she was
the “Legal Representative/Responsible Party.” She gave the care home a copy of
the power-of-attorney document (the POA) that vested Dean with authority over a
wide range of Hampton’s affairs, expressly reciting the authority to make
“[d]ecisions [r]elating to . . . [Hampton’s] institutionalization in a nursing home or
other facility” and the power to “act on [Hampton’s] behalf for the following
purpose[s] . . . [c]laims and [l]itigation.” Execution of the agreement to arbitrate
was not required for Hampton’s admission to the care home. The agreement
provided that it could be rescinded by written notice to the care home within thirty
(30) days of its execution.
-2- On June 21, 2019, as administratrix of Hampton’s estate, Dean filed a
civil action in Jefferson Circuit Court against Presbyterian Homes. Dean alleged
that Presbyterian Homes failed to provide to Hampton the minimum care necessary
for her wellbeing and that it knew that it could not do so. She alleged that the
home’s wrongful conduct caused Hampton to suffer an accelerated deterioration of
health; an unnecessary loss of dignity; extreme pain and suffering; mental anguish;
disability; and death. Presbyterian Homes answered the complaint and denied any
wrongdoing. It also asserted that the action (except for the wrongful death claim)
was prohibited by the terms of the parties’ arbitration agreement.
In January 2020, Presbyterian Homes filed a motion to dismiss the
action or, in the alternative, to compel the alternative dispute resolution process,
staying the wrongful death claim pending resolution of the arbitrable claims. It
relied upon the arbitration agreement signed by Dean on Hampton’s behalf;
Kentucky’s version of the Uniform Arbitration Act, codified at Kentucky Revised
Statutes (KRS) 417.050 et seq.; and the Federal Arbitration Act (FAA), codified at
9 United States Code § 1 et seq. The care home argued that the POA document
gave Dean broad authority over Hampton’s affairs -- specifically encompassing the
power to execute the arbitration agreement on her behalf upon her admission to its
facility.
-3- In her response, Dean contended that the arbitration agreement was
unenforceable for three reasons. First, she lacked necessary authority under the
provisions of the POA to enter into a binding, pre-dispute arbitration agreement on
Hampton’s behalf. Next, the arbitration agreement was not properly authenticated.
And third, the agreement was both procedurally and substantively unconscionable.
The circuit court treated the motion as one for summary judgment and
denied it in an order entered May 8, 2020. Relying on the decision of the Supreme
Court of the United States in Kindred Nursing Centers Ltd. Partnership v. Clark,
___ U.S. ___, 137 S. Ct. 1421, 197 L. Ed. 2d 806 (2017), and the decision of the
Supreme Court of Kentucky upon remand in Kindred Nursing Centers Limited
Partnership v. Wellner, 533 S.W.3d 189 (Ky. 2017), the circuit court concluded
that it could not infer from the authority expressly granted to Dean that she had
power sufficient to bind Hampton to the arbitration agreement. In light of that
conclusion, the court did not address the other arguments presented by Dean to
show that the agreement was unenforceable. This appeal followed.
An order denying a motion to compel arbitration is immediately
appealable. KRS 417.220(1); Conseco Finance Servicing Corp. v. Wilder, 47
S.W.3d 335 (Ky. App. 2001). We review “the trial court’s application of [the law]
de novo, although the trial court’s factual findings, if any, will be disturbed only if
clearly erroneous.” Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581, 590 (Ky.
-4- 2012).
Both Kentucky precedent and national policy favor agreements to
arbitrate. Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850 (Ky. 2004). Similarly,
“[a]rbitration has always been favored by the courts.” Poggel v. Louisville Ry. Co.,
225 Ky. 784, 10 S.W.2d 305, 310 (1928). Nevertheless, a party seeking to compel
arbitration has the initial burden of establishing the existence of a valid agreement
to arbitrate. Ping, supra. Whether a valid agreement exists is determined by
ordinary state-law principles of contract formation. KRS 417.050. However, the
statutory framework of the FAA also impacts the court’s determination whether a
valid arbitration agreement was formed. Kindred Nursing Centers Ltd.
Partnership v. Clark, __ U.S. __, S. Ct. 1421, 1428, 197 L. Ed. 2d 806 (2017) (“By
its terms, then, the [FAA] cares not only about the ‘enforce[ment]’ of arbitration
agreements, but also about their initial ‘valid[ity]’—that is, about what it takes to
enter into them.”)
On appeal, Presbyterian Homes argues that the trial court erred by
refusing to compel arbitration and to stay the wrongful death claim. It contends
that it met its burden of establishing the existence of a valid agreement to arbitrate
because the POA document expressly delegated to Dean the authority to execute
the agreement on Hampton’s behalf. We agree.
-5- In Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015),
rev’d in part, vacated in part by Kindred Nursing Centers Ltd. Partnership v.
Clark, __ U.S. __, 137 S. Ct. 1421, 197 L. Ed. 2d 806 (2017), the Supreme Court
of Kentucky examined the power-of-attorney documents in each of three
consolidated arbitration cases -- Extendicare Homes, Inc. v. Whisman; Kindred
Nursing Centers Ltd. Partnership v. Clark; and Kindred Nursing Centers Ltd.
Partnership v. Wellner. The Court concluded that none of the attorneys-in-fact
was authorized to execute an arbitration agreement tendered by the care homes
upon the residents’ admission. It stated that:
without a clear and convincing manifestation of the principal’s intention to do so, we will not infer the delegation to an agent of the authority to waive a fundamental personal right so constitutionally revered as the “ancient mode of trial by jury.”
Id. at 313. The Court held that an attorney-in-fact has authority to execute an
arbitration agreement only where the power-of-attorney document explicitly grants
that specific authority -- the “clear-statement rule.”
Upon its review, the U.S. Supreme Court noted that the FAA
preempts any state rule that discriminates on its face against arbitration. Kindred
Nursing Centers, supra. The Court rejected our clear statement rule because it
singled out arbitration agreements for disfavored treatment in violation of the
FAA. It concluded that by its decision in Whisman, the Supreme Court of
-6- Kentucky had “specially impeded the ability of attorneys-in-fact to enter into
arbitration agreements” and “flouted the FAA’s command to place those
agreements on an equal footing with all other contracts.” __ U.S. __, 137 S. Ct.
1421, 1429, 197 L. Ed. 2d 806 (2017).
However, with respect to the decision of our Supreme Court in the
associated case of Kindred Nursing Centers Ltd. Partnership v. Wellner, the U.S.
Supreme Court was uncertain whether the clear-statement rule had influenced the
court’s construction of the POA document at issue. Consequently, the U.S.
Supreme Court remanded that case for a determination of whether there were
alternative grounds for the court’s rejection of the arbitration agreement in light of
the provisions of the Wellner POA that were “wholly independent” of the clear-
statement rule. Id. at 1424.
Upon remand, the Supreme Court of Kentucky again considered the
breadth and scope of the Wellner POA. In Kindred Nursing Centers Limited
Partnership v. Wellner, 533 S.W.3d at 191, the Court concluded that its prior
decision had not been influenced by the clear-statement rule. The Court reasoned
that the power of a principal’s attorney-in-fact to enter into a pre-dispute
arbitration agreement on his behalf could be inferred from a comprehensive
delegation of authority. However, the specific authority described in the Wellner
POA was deemed insufficiently broad to cover execution of a pre-dispute
-7- arbitration agreement. The POA provisions cited by the Court vested Wellner’s
attorney-in-fact with authority “to demand, sue for, collect, recover and receive all
debts, monies, interest and demands whatsoever now due or that may hereafter be
or become due to me (including the right to institute legal proceedings therefor)”;
and the power “to make, execute and deliver deeds, releases, conveyances and
contracts of every nature in relation to both real and personal property, including
stocks, bonds, and insurance.” Id. at 193. In its decision, our Supreme Court
expressed “a willingness to infer in proper cases the power to commit to arbitration
even where that express authority [is] lacking.” Id. The inference can be made
wherever it is “reasonably consistent with the principal’s expressed grant of
authority.” Id. at 194.
In the case before us, The Hampton POA conferred broad authority
upon Dean to make “[d]ecisions [r]elating to . . . [Hampton’s] Institutionalization
in a nursing home” and to act on her behalf with respect to “[c]laims and
[l]itigation.” Dean’s decision to execute the arbitration agreement was directly
related to Hampton’s placement at the care home. Execution of the agreement was
within her all-encompassing authority to make decisions related to Hampton’s
admission to the of facility. The fact that execution of the agreement was entirely
optional for Hampton’s admission to the care home is entirely irrelevant because
Dean was specifically empowered to make the decision on Hampton’s behalf under
-8- the express terms of the POA document. Moreover, as the Kentucky Supreme
Court pointed out in Wellner, the authority of an attorney-in-fact to bind her
principal will be inferred where it is “reasonably consistent with the principal’s
expressed grant of authority[.]” Wellner, 533 S.W.3d at 194. The express grant of
authority conferred upon Dean by Hampton’s POA implicitly contemplates and
expressly encompasses the power to bind Hampton to the arbitration agreement.
The circuit court erred as a matter of law by concluding that the
Hampton POA document “did not include any power that could be interpreted to
permit [Dean] to enter into a pre-dispute arbitration agreement on [Hampton’s]
behalf.” Consequently, the judgment of the Jefferson Circuit Court must be
reversed.
Therefore, we REVERSE the judgment of the Jefferson Circuit Court
and REMAND for entry of an order consistent with this opinion.
KRAMER, JUDGE, CONCURS.
THOMPSON, K., JUDGE, CONCURS IN RESULT ONLY.
BRIEFS FOR APPELLANTS: BRIEF FOR APPELLEE:
Edward M. O’Brien Megan L. Adkins Louisville, Kentucky Lexington, Kentucky
-9-