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Golden Gate National Senior Care, LLC v. Rucker

Court of Appeals of Kentucky

May 31, 2019

GOLDEN GATE NATIONAL SENIOR CARE, LLC, D/B/A GOLDEN LIVING; GGNSC FRANKFORT, LLC D/B/A GOLDEN LIVINGCENTER - FRANKFORT; GGNSC ADMINISTRATIVE SERVICES, LLC D/B/A GOLDEN VENTURES; GGNSC HOLDINGS, LLC D/B/A GOLDEN HORIZONS; GGNSC EQUITY HOLDINGS, LLC; GGNSC EQUITY HOLDINGS II, LLC; GOLDEN GATE ANCILLARY, LLC D/B/A GOLDEN INNOVATIONS; GGNSC CLINICAL SERVICES, LLC D/B/A GOLDEN CLINICAL SERVICES; GPH FRANKFORT, LLC; CHRISTY KING, IN HER CAPACITY AS ADMINISTRATOR OF GOLDEN LIVINGCENTER - FRANKFORT; WAYNE KARCZEWSKI, IN HIS CAPACITY AS ADMINISTRATOR OF GOLDEN LIVINGCENTER, FRANKFORT; AND CHRISTOPHER THOMAS JACKSON, IN HIS CAPACITY AS ADMINISTRATOR OF GOLDEN LIVINGCENTER - FRANKFORT APPELLANTS
v.
BARBARA RUCKER, AS EXECUTRIX OF THE ESTATE OF LORAINE BROWN APPELLEE

          APPEAL FROM FRANKLIN CIRCUIT COURT HONORABLE PHILLIP J. SHEPHERD, JUDGE ACTION NO. 14-CI-01439.

          BRIEFS FOR APPELLANTS: Marcia L. Pearson, Edward M. O'Brien, Louisville, Kentucky

          BRIEFS FOR APPELLEE: Brian M. Jasper, Robert E. Salyer, Lexington, Kentucky

          BEFORE: CLAYTON, CHIEF JUDGE; DIXON AND LAMBERT, JUDGES.

          OPINION

          LAMBERT, JUDGE:

         This appeal is from an order of the Franklin Circuit Court holding that the Appellants' (collectively, Golden Living Center's) arbitration agreement is invalid and denying the motion to dismiss or stay the Appellee's claims. We affirm.

         Loraine Brown was admitted to Golden Living Center in October 2008. At that time, her daughter, Barbara Rucker, as power of attorney (POA), executed a number of admissions documents. Included in the packet was a three-page arbitration agreement, signed by Rucker. Brown was eventually discharged from Golden Living and remained in her personal residence for several years.

         In January 2014, Brown was again admitted to the facility. This time, when presented with the packet of admission documents, she chose not to sign the arbitration agreement. Important to note are two facts: The document, underneath its title ("Alternate Dispute Resolution Agreement") contained the sentence, "This agreement is not a condition of admission to or continued residence in the facility"; and, on the signature line, it specifically noted that "[t]he Alternative Dispute Resolution Agreement above set forth is hereby DECLINED," and this was signed by "Barbara B. Rucker POA." (Emphases original.) Golden Living Center's agent also signed this agreement, acknowledging that Brown had declined it.

         Brown remained at Golden Living, except for times when she was hospitalized, until April 29, 2014. She filed a lawsuit against the appellants on December 1, 2014, with claims against them for negligence, medical negligence, corporate negligence, and violations of the Long-Term Care Residents Rights Act, Kentucky Revised Statute (KRS) 216.510 et. seq. Brown alleged numerous injuries caused by the wrongful conduct of Golden Living Center during her brief 2014 stay there. These injuries, she claimed, resulted in "accelerated deterioration of her health and physical condition beyond that caused by the normal aging process."

         Shortly thereafter, Golden Living Center filed a "Motion to Dismiss or, in the Alternative, to Stay the Lawsuit Pending Arbitration Proceedings." The parties briefed their respective stances on the motion. On March 12, 2015, the circuit court held a hearing, and the order denying Golden Living Center's motion was entered on August 14, 2015. A notice of appeal was timely filed. The matter was held in abeyance in this Court (pending relevant decisions in state and federal courts) and was returned to the active docket in late 2018. The parties were allowed supplemental briefing to address new case law applicable to these issues.

         Meanwhile, Brown passed away on December 31, 2017. By agreement of the parties, Rucker (as executrix for the estate of her mother) was substituted as a party plaintiff by order entered May 4, 2018. See KRS 395.278.

         We begin by stating our standard of review in appeals from orders denying motions to compel arbitration:

Ordinarily, such orders are interlocutory and are not immediately appealable. However, an order denying a motion to compel arbitration is immediately appealable. KRS 417.220(1). See also Conseco Finance Servicing Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky. App. 2001). The enforcement and effect of an arbitration agreement is governed by the Kentucky Uniform Arbitration Act (KUAA), KRS 417.045 et seq., and the Federal Arbitration Act, (FAA) 9 U.S.C.4 §§ 1 et seq. "Both Acts evince a legislative policy favoring arbitration agreements, or at least shielding them from disfavor." Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581, 588 (Ky. 2012).
But under both Acts, a party seeking to compel arbitration has the initial burden of establishing the existence of a valid agreement to arbitrate. Id. at 589. That question is controlled by state law rules of contract formation. Id. at 590. The FAA does not preempt state law contract principles, including matters concerning the authority of an agent to enter into a contract and which parties may be bound by that contract. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31, 129 S.Ct. 1896, 1902, 173 ...

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