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GGNSC Frankfort, LLC v. Richardson

Court of Appeals of Kentucky

August 2, 2019

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; GOLDEN GATE NATIONAL SENIOR CARE, LLC D/B/A GOLDEN LIVING; GOLDEN GATE ANCILLARY, LLC D/B/A GOLDEN INNOVATIONS; GPH FRANKFORT, LLC; ROBERT DURHAM AND ANN PHILLIPS APPELLANTS
v.
JAMES L. RICHARDSON, AS EXECUTOR OF THE ESTATE OF FANNIE H. LYON, DECEASED; AND JAMES L. RICHARDSON, ON BEHALF OF THE WRONGFUL DEATH BENEFICIARIES OF FANNIE H. LYON APPELLEES

          ON REMAND FROM SUPREME COURT OF KENTUCKY NO. 2016-SC-000564-D

          APPEAL FROM FRANKLIN CIRCUIT COURT HONORABLE O. REED RHORER, JUDGE ACTION NO. 11-CI-00572

          BRIEFS FOR APPELLANTS: Marcia L. Pearson Louisville, Kentucky.

          BRIEF FOR APPELLEES: Robert E. Salyer Richard E. Circeo Lexington, Kentucky.

          BEFORE: ACREE, COMBS, AND K. THOMPSON, JUDGES.

          OPINION

          THOMPSON, K., JUDGE.

         This matter is before this Court on remand pursuant to an order of the Kentucky Supreme Court instructing this Court to reconsider its prior opinion in light of Kindred Nursing Centers Limited Partnership v. Clark, __ U.S. __, 137 S.Ct. 1421, 197 L.Ed.2d 806 (2017) and Kindred Nursing Centers Limited Partnership v. Wellner, 533 S.W.3d 189 (Ky. 2017). Having done so, we conclude that our prior opinion, while correctly decided when rendered, must be reversed in part.

         On February 23, 2006, Fannie H. Lyon executed a durable power-of-attorney (POA) appointing her son, James Richardson, as her attorney-in-fact. The POA conferred various decision-making powers regarding her financial affairs, health care, and real and personal property. James was given the authority to "operate and manage" Fannie's "farm, rental or other business or commercial interest or activity" and, in the same sentence, was given the power "to commence or defend administrative and legal proceedings concerning [Fannie's] property and rights[.]" Additionally, in capitalized bold print and in a separate paragraph the POA provided:

AND TO GENERALLY DO AND PERFORM FOR ME ALL THAT I MAY DO IF ACTING IN MY OWN PERSON. THIS POWER/DESIGNATION IS DURABLE. BY MAKING THIS POWER/DESIGNATION I AM NOT HEREBY DISQUALIFYING MYSELF FROM TRANSACTING IN MY OWN PROPER PERSON.

         Fannie was admitted to the Golden Living Center on September 2, 2009, and except when hospitalized, remained a resident until her death on April 5, 2010. On the date of her admission, James signed documents on Fannie's behalf, including an optional arbitration agreement providing that the parties submit any claims arising out of or related to Fannie's care at the facility to arbitration. The agreement instructs that by agreeing to arbitrate any disputes, the parties waived their constitutional rights to have a claim decided in a court of law.

         After James was appointed administrator of Fannie's estate, he filed this action in the Franklin Circuit Court alleging negligence, medical negligence, corporate negligence, violation of Kentucky's long-term care resident's rights statute, Kentucky Revised Statues (KRS) 216.515, and wrongful death. GGNSC filed a motion to compel arbitration and dismiss the pending lawsuit or stay the lawsuit pending arbitration. The circuit court denied GGNSC's motion ruling that the POA does not encompass the power to execute an arbitration agreement. GGNSC appealed, arguing that the POA gave James actual and apparent authority to execute the arbitration agreement. GGNSC also argued: (1) federal and state law favor enforcement of an agreement to arbitrate and arbitration is a constitutional right; (2) James failed to present adequate grounds for revocation of the agreement; and (3) there are no other grounds for the revocation of the agreement.

         In our original opinion, we held that the arbitration agreement did not preclude James's wrongful death action. We relied upon Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky. 2012), where the Court rejected the notion that a similar arbitration agreement executed by an attorney-in-fact could bind the beneficiaries of a wrongful death claim. As the Ping Court held, the statutory wrongful death claim, "does not derive from any claim on behalf of the decedent," and, therefore, the decedent could not directly or through an attorney-in-fact bind the wrongful death beneficiaries to an arbitration agreement. Id. at 600. That part of our decision is not at issue on remand.

         The issue is whether the personal injury and statutory claims that belonged to Fannie and to which the estate succeeded must be submitted to arbitration. With the benefit of the United States Supreme Court's decision in Clark and the Kentucky Supreme Court's decision in Wellner, we hold those claims must be submitted to arbitration.

         The issue of whether an attorney-in-fact had authority to enter into an arbitration agreement upon admission of a principal to a nursing home has been a recurring issue. In fact, Wellner was initially before the Supreme Court of Kentucky with two other cases-Extendicare Homes, Inc. v. Whisman and Kindred Nursing Centers Ltd. Partnership v. Clark-which were consolidated into a single opinion styled Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015). Extendicare Homes, Inc., did not seek review by the United States Supreme Court and its case became final. Kindred sought review of the Kentucky Supreme Court in the Clark and the Wellner cases in the United States Supreme Court. The United States Supreme Court issued a consolidated opinion and reversed the Supreme Court of Kentucky in the Clark case but remanded the Wellner case. To avoid confusion, ...


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