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Kindred Nursing Centers Limited Partnership v. Wellner

Supreme Court of Kentucky

November 22, 2017

KINDRED NURSING CENTERS LIMITED PARTNERSHIP D/B/A WINCHESTER CENTRE FOR HEALTH AND REHABILITATION N/K/A FOUNTAIN' CIRCLE HEALTH AND REHABILITATION; KINDRED NURSING CENTERS EAST, LLC; KINDRED HOSPITALS LIMITED PARTNERSHIP; KINDRED HEALTHCARE, INC.; AND KINDRED HEALTHCARE OPERATING, INC. APPELLANTS
v.
BEVERLY WELLNER, INDIVIDUALLY AND ON BEHALF OF THE ESTATE OF JOE P. WELLNER, DECEASED, AND ON BEHALF OF THE WRONGFUL DEATH BENEFICIARIES OF JOE P. WELLNER APPELLEE

          Rendered: November 2, 2017

         ON REMAND FROM THE UNITED STATES SUPREME COURT CASE NO. 16-32 CLARK CIRCUIT COURT CASE NO. 10-CI-00472

          COUNSEL FOR APPELLANTS: Donald Lee Miller II Kristin M. Lomond James Peter Cassidy III Quintairos, Prieto, Wood & Boyer P.A.

         COUNSEL FOR APPELLEE: James T. Gilbert Coy, Gilbert, Shepherd 8b Wilson Richard Eric Circeo Robert Earl Salyer Wilkes 8s McHugh, P.A.

          OPINION

          VENTERS JUSTICE.

         This matter is before the Court on remand pursuant to the opinion of the United States Supreme Court in Kindred Nursing Centers Ltd. Partnership v. Clark, 137 S.Ct. 1421 (2017). The case initially came to this Court as three separate actions which we consolidated into a single opinion styled Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015).[1] Extendicare Homes, Inc., did not seek review by the United Stated Supreme Court, and so our disposition of its case, No. 2013-SC-000426-I, Extendicare Homes, Inc. v. Whisman became final. Without Extendicare Homes as a party to the United States Supreme Court action, the case went forward with Kindred identified as the Appellant. To avoid confusion, we refer to the final decision of this Court as "Extendicare" and the decision of the United States Supreme Court as "Kindred."

         Among other holdings, Extendicare held that an attorney-in-fact did not have the authority to bind his principal to a pre-dispute arbitration agreement unless that authority was clearly stated in the pbwer-of-attorney document. In Kindred, the Supreme Court dubbed this the "clear statement rule," and for convenience and consistency we accept that term as a useful name. As articulated in Extendicare, we set forth the clear statement rule as a more specific application of the general rule stated in Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky. 2012).[2] We said in Extendicare:

[Ping] cautioned . . . that given the 'significant legal consequences' arising from an agreement waiving the principal's rights of access to the courts and to trial by jury, 'authority to make such a waiver is not to be inferred lightly.' Our holdings throughout this opinion, as in Ping itself, serve to highlight our reservation about casually inferring a power laden with such consequences.

478 S.W.3d at 327 (quoting Ping, 376 S.W.3d at 593).

         Kindred Nursing Centers challenged the "clear statement rule" by petitioning the United States Supreme Court for a writ of certiorari. The writ was granted and the Supreme Court ultimately concluded that our adoption of the clear statement rule, insofar as it affected Kindred's pre-dispute arbitration agreement, impinged upon the supremacy of the Federal Arbitration Act. Our ruling in the case of Kindred Nursing Centers Ltd. Partnership v. Clark turned exclusively upon the clear statement rule, and so the Supreme Court's decision reversed it. However, our ruling in the associated case of Kindred Nursing Centers Ltd. Partnership v. Wellner also rested upon alternative grounds. Uncertain about whether we had incorporated the clear statement rule into the alternative basis for the Wellner decision, the Supreme Court remanded that case for us to determine whether the alternate grounds for our holding with respect to the Wellner POA was "wholly independent" of the clear statement rule. The Supreme Court said:

The Kentucky Supreme Court began its opinion by stating that the Wellner power of attorney was insufficiently broad to give Beverly the authority to execute an arbitration agreement for Joe. If that interpretation of the document is wholly independent of the court's clear-statement rule, then nothing we have said disturbs it. But if that rule at all influenced the construction of the Wellner power of attorney, then the court must evaluate the document's meaning anew. The court's opinion leaves us uncertain as to whether such an impermissible taint occurred. On remand, the court should . determine whether it adheres, in the absence of its clear-statement rule, to its prior reading of the Wellner power of attorney [POA].

Kindred, 137 S.Ct. at 1429 (internal citations omitted) (emphasis added). So, the question that Kindred presents to us on remand is this:

Was our interpretation that the Wellner POA did not authorize attorney-in-fact Beverly Wellner to execute Kindred's pre-dispute arbitration agreement wholly independent of, and not impermissibly tainted by, the clear statement rule?

         The Supreme Court directed on remand that we "evaluate the document's meaning anew" only if our original construction of the Wellner POA was "impermissibl[y] taint[ed]" by, or not "wholly independent of," our subsequent adoption of the "clear statement rule.'' It follows that if our construction of the Wellner POA was "wholly independent of [the] clear-statement rule, then nothing [in Kindred] disturbs it." Id.[3]

         Our ruling in Extendicare relating to Kindred's demand for arbitration of the Wellner claim was based upon two alternative grounds. First, we concluded that neither of the two POA provisions relied upon by Kindred gave the agent, Beverly Wellner, the authority to execute on behalf of her principal, Joe Wellner, a pre-dispute arbitration agreement. Second, we applied the ill-fated clear statement rule. The Supreme Court was "uncertain" about whether the second alternative unduly influenced our reasoning in deciding the first alternative. The premise behind the Supreme Court's uncertainty seems to be its perception that our application of the clear statement rule, rather than the manifestation of our profound respect for the right of access to the Court of Justice explicitly guaranteed by the Kentucky Constitution and the right to trial by jury designated as "sacred" by Section 7 of the Kentucky Constitution, demonstrated instead a hostility to federal policies implicit in the Federal Arbitration Act and a resulting aversion to any implication of authority to make an arbitration agreement.

         So, we explain that aspect of our Extendicare decision to demonstrate its purity from the taint of anti-arbitration bias. As a frame of reference for whether our interpretation of the breadth and scope of the Wellner POA was unduly influenced by the clear statement rule, we begin with a glance at the Clark POA. We concluded that the universally broad and vague language employed in the Clark POA,[4] without any express reference to the waiver of the rights of access to the courts and jury trials, nevertheless did indeed vest the principal's attorney-in-fact with authority to execute a pre-dispute arbitration agreement. We held that the Clark POA authorized the agent's execution of Kindred's pre-dispute arbitration agreement despite the absence of a clear statement to that effect; only the application of the clear statement rule avoided that result. Obviously, nothing even close to a "clear statement" was needed in the Clark POA to authorize the agent to waive her principal's fundamental constitutional right of access to the courts and a jury trial. That power, we said, would be implied from the vague and all-encompassing language of the Clark POA. The concern that, because of some residual influence of the clear statement rule, we are averse to inferring the authority to execute an arbitration agreement dissolves upon recognizing that we inferred exactly that authority in the Clark matter. See Extendicare, 478 S.W.3d at 327.

         Turning now to our interpretation of the Wellner POA's specific language, we note again that Kindred relied upon only two provisions of the Wellner POA as authority for Beverly Wellner's execution of Kindred's pre-dispute arbitration agreement: 1) the power "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, 2) 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 325.[5]

         At this point it is worth recalling that the "act" of Wellner's agent which required authorizing language from the POA document was riot the enforcement, through legal proceedings or otherwise, of something then due or to become due to Joe Wellner; nor was it the making of a contract or instrument pertaining to any of Joe Wellner's property. The "act" that required authorization was signing an agreement which makes no ...


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