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Peck Law Group, APC Successful in Opposing Nursing Home Petition to Compel Arbitration In the matter of Duckworth v. Porterville Convalescent Hospital

Defendants have the burden of establishing the existence of a valid agreement to arbitrate. Pagarian v. Libby Care Center, Inc. (2002) 99 Cal. App. 4th 298, 301; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal. 4th 951, 972; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal. 4th 394, 413. Defendants must establish the existence of an arbitration agreement between the parties to be bound thereby. Condee v. Longwood Management Corp. (2001) 88 Cal. App. 4th 215, 218-219.

“It follows, of course, that if there was no valid contract to arbitrate, the petition must be denied.” See Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal. App. 4th 348, 356. California “Code of Civil Procedure §1280 et seq. provides a procedure for the summary determination of whether a valid agreement to arbitrate exists, and such summary procedure satisfies both state and federal law.” Id. Under this procedure, the petitioner bears the burden of establishing the existence of a valid agreement to arbitrate, and a party opposing the petition bears of proving by a preponderance of the evidence any fact necessary to its defense. The trial court sits as a trier of fact, weighing all the affidavits, declarations, and other evidence, as well as oral testimony received at the court’s discretion, to reach a final determination on the issue of arbitrability.” Id. at 356-57.

When a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists, and if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal. 4th 394, 413.

The threshold question for the court is therefore whether a valid arbitration agreement exists between the parties. “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to submit.” Main v. Merrill Lynch, Pierce, Fenner & Smith (1977) 67 Cal. App. 3d 19, 32.

  • DECEDENT WILLIE BEE DUCKWORTH DID NOT EXECUTE A BINDING  ARBITRATION AGREEMENT.           
  • The Decedent Willie Bee Duckworth did not sign the arbitration agreements, therefore the Petition to Compel Binding arbitration is not binding on the decedent. No Actual Agency Relationship Exists Between Plaintiff and her Son Because there is No Valid Power of Attorney Authorizing Anyone to Bind the Decedent to any Contractual Obligatiom

 

  1. PLAINTIFF’S SON HAD NO AUTHORITY TO BIND PLAINTIFF TO CONTRACTUAL BINDING ARBITRATION NOR ANY AGREEMENTS 

A power of attorney is a written instrument, however denominated, that is executed by a natural person having the capacity to contract. See Cal. Prob. Code §4120 (“A natural person having the capacity to contract may execute a power of attorney.”) In this case, it is undisputed that plaintiff WILLIE BEE DUCKWORTH (“WILLIE”) did not sign the Arbitration Agreement (“Agreement”) and thus, did not waive her constitutional right to a jury trial. Rather, Plaintiff’s son, LEROY M. DUCKWORTH (“LEROY”) signed the Agreement allegedly in his alleged capacity as Plaintiff’s “Agent/Representative.”

This Defendant / petitioning party, though, has failed to provide this Court with any documentation evidencing any agency agreement, in which the principal WILLIE actually authorized, or that LEROY DUCKWORTH (‘LEROY’) had the actual authority to enter into any contractual agreements, including any binding arbitration / contractual agreements, with this defendant on behalf of the decedent WILLIE.

Defendants have not introduced any evidence that WILLIE by words or actions — agreed to grant DUCKWORTH any authority to sign arbitration agreements or to make health care decisions for her while she was capable of making them for herself.

Thus, petitioning defendants failed to meet their burden of proof to establish WILLIE agreed and/or gave LEROY any authority bind WILLIE to the arbitration of any legal disputes. Garrison v. Superior Court (2005) 132 Cal.App.4th 253, 263 at (p. 263.)

B.     THE HEALTH CARE POWER OF ATTORNEYATTACHED TO THIS PETITION IS LEGALLY INSUFFICIENT BECAUSE IT DOES NOT COMPORT WITH CALIFORNIA PROBATE CODE SECTION 4121 THUS FAILING TO SATISY THE LEGAL REQUIREMENTS FOR A LEGALLY VALID POWER OF ATTORNEY

C.     THE ARBITRATION AGREEMENT IS UNENFORCEABLE BECAUSE IT VIOLATES MANDATORY STATUTORY REQUIREMENTS

 

  • The Arbitration Agreement Does Not Comply With Health & Safety Code §1599.65

 

The legislature has taken the time to devote an entire chapter of the Health & Safety Code to admission agreements for long-term health care facilities. Chapter 3.9 of the California Health & Safety Code, beginning with §1599.60 defines and specifies the requirements of admission agreements for long-term health care facilities. Defendant’s Facility, is duly licensed as such and falls under the definitions contained in the California Health & Safety Code.

  1. Plaintiff Was Required to Sign the Agreement Herself

As noted, herein Defendant has failed to put forth any evidence indicating that Plaintiff was incompetent or unable to understand and sign the contract because of her medical condition. See Garrison v. Sup.Ct. (2005) 132 CA4th 253; Hogan v. Country Villa Health Services (2007) 148 CA 4th 259; see also Civil Code §1556 (“all persons are capable of contracting except minors, persons of unsound mind, and persons deprived of civil rights.”)

Accordingly, if Plaintiff had capacity, then Defendant was required to obtain Plaintiff’s signature. See California Health and Safety Code § 1599.65 (“Unless the prospective resident has been declared legally incompetent or is unable to understand and sign the contract because of his or her medical condition, he or she shall sign or cosign the admission agreement.”) (Emphasis added). “In the event the patient is unable to sign the contract, the reason shall be documented in the resident’s medical record by the admitting physician.” Id. (Emphasis added).   Not only did Plaintiff not sign the Agreement, but Defendant has failed to provide any legally admissible evidence that the reason for this failure, was documented by WILLIE’S admitting physician in her medical record or that WILLIE had been deemed legally incompetent. Defendant therefore violated Health & Safety Code §1599.65.

  1. PLAINTIFF’S HEALTH AND SAFETY CODE § 1430(b) CAUSE OF ACTION CANNOT BE COMPELLED TO ARBITRATION AS A MATTER OF LAW PURSUANT TO HEALTH AND SAFETY CODE § 1599.81(B).

            Health and Safety Code § 1430(b) states that “[a] current or former resident or patient of a skilled nursing facility . . . or intermediate care facility . . . may bring a civil action against the licensee of a facility who violates the Patient’s Bill of Rights in Title 22 Code of Regulations § 72527 or any other right provided for by state or federal law.” Health and Safety Code §1430(b) further states that, “the suit shall be brought in a court of competent jurisdiction.”

Health and Safety Code § 1430(b) specifically states that an “agreement by a resident or patient of a skilled nursing facility or intermediate care facility to waive his or her rights to sue pursuant to this subdivision shall be void as contrary to public policy.” Pursuant to Health and Safety Code § 1599.81(d), “the patient may not waive his or her ability to sue for violation of the Patient’s Bill of Rights” under Health and Safety Code § 1430(b).   Additionally, the text of the Arbitration Agreement at issue in this case, expressly provides that the resident, in signing the Agreements, is not agreeing to waive his rights under §1430(b). (See Art. II of the Arbitration Agreement attached to Defendant’ Petition).

THE COURT SHOULD USE ITS DISCRETION Under Code of Civil Procedure §1281.2(c) TO DENY THE PETITION TO COMPEL ARBITRATION AVOID CONFLICTING RULINGS

The Court has broad discretion to deny a petition to compel arbitration pursuant to California Code of Civil Procedure §1281.2(c), where there is a party to the arbitration agreement who is also a party to a pending court action with a third party arising out of the same transaction or series of related transactions, and where there is a possibility of conflicting rulings on common issues of law or fact.   California Code of Civil Procedure §1281.2 provides that a court may refuse to compel arbitration if it finds that:

(c)     A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.

 

California Code of Civil Procedure §1281.2(c) further provides that:

“If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c) herein, the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding…”

 

Section 1281.2(c) “addresses the peculiar situation that arises when a controversy also affects claims by or against other parties not bound by the arbitration agreement.” Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 393.

Cronus described or established several pertinent principles. First, the FAA “does not preempt the application of section 1281.2, subdivision (c) where the parties have agreed that their arbitration agreement would be governed by the law of California.” (Cronus, supra, 35 Cal.4th at p. 380.

Second, the Cronus case presented circumstances where the parties agreed that their arbitration agreement would be governed by California law, “but they further agreed that the designation of California law ‘shall not be deemed an election to preclude application of the [FAA], if it would be applicable.’” (Cronus, supra, 35 Cal.4th at p. 380.) The court concluded that “in this situation, the FAA also does not preempt the application of section 1281.2, subdivision (c).”

Third, in reaching its conclusion, the Cronus court stated the analytical principle to be applied: “Under United States Supreme Court jurisprudence, we examine the language of the contract to determine whether the parties intended to apply the FAA to the exclusion of California procedural law and, if any ambiguity exists, to determine whether section 1281.2(c) conflicts with or frustrates the objectives of the FAA.” (Cronus, supra, 35 Cal.4th at p. 383.)

Fourth, Cronus concluded both that section 1281.2(c) does not conflict with the procedural provisions of the FAA and that section 1281.2(c) does not contravene the substantive goals and policies of the FAA. The court first discussed procedure, and then turned to substance. In concluding that “the procedural provisions of the FAA [(§§ 3 and 4)] and section 1281.2 do not conflict” (Cronus, supra, 35 Cal.4th at p. 390), the court observed: “[t]he language used in sections 3 and 4 and the legislative history of the FAA suggest that the sections were intended to apply only in federal court proceedings.” (Id. at p. 388; see also Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1351 (Cable Connection) [“Sections 3 and 4 of the FAA, governing stays of litigation and petitions to enforce arbitration agreements, do not apply in state court”]

Cronus also relied on the court’s prior decision in Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394 (Rosenthal), quoting Rosenthal’s statement (id. at p. 409) that, “ ‘Like other federal procedural rules, therefore, “the procedural provisions of the [FAA] are not binding on state courts . . . provided applicable state procedures do not defeat the rights granted by Congress.” ’ ” (Cronus, supra, 35 Cal.4th at p. 390, italics added in Cronus.) Further: “ ‘Our statutes do establish procedures for determining enforceability not applicable to contracts generally, but they do not thereby run afoul of the [FAA’s] section 2, which states the principle of equal enforceability, but does not dictate the procedures for determining enforceability.’ “ (Cronus, at p. 390.)

Finally, Cronus rejected claims that application of section 1281.2(c) would contravene the substantive goals and policies of the FAA (Cronus, supra, 35 Cal.4th at p. 387), and that section 1281.2(c) “conflicts with the spirit of the FAA because its application would undermine and frustrate . . . section 2’s policy of enforceability of arbitration agreements.” (Cronus, at pp. 391, 391-393.) The court observed:

“[S]ection 1281.2(c) is not a special rule limiting the authority of arbitrators. It is an evenhanded law that allows the trial court to stay arbitration proceedings while the concurrent lawsuit proceeds or stay the lawsuit while arbitration proceeds to avoid conflicting rulings on common issues of fact and law amongst interrelated parties. Moreover, ‘Section 1281.2(c) is not a provision designed to limit the rights of parties who choose to arbitrate or otherwise to discourage the use of arbitration. Rather, it is part of California’s statutory scheme designed to enforce the parties’ arbitration agreements, as the FAA requires. Section 1281.2(c) addresses the peculiar situation that arises when a controversy also affects claims by or against other parties not bound by the arbitration agreement. The California provision giving the court discretion not to enforce the arbitration agreement under such circumstances—in order to avoid potential inconsistency in outcome as well as duplication of effort—does not contravene the letter or the spirit of the FAA.’ ” (Cronus, supra, 35 Cal.4th at p. 393.) The court concluded: “Our opinion does not preclude parties to an arbitration agreement to expressly designate that any arbitration proceeding should move forward under the FAA’s procedural provisions rather than under state procedural law.

There is nothing in the attached Arbitration agreement which expressly states that this arbitration is subject to the procedural provisions of the FAA rather than the provisions enumerated under California law Pursuant to California Code of Civil Procedure 1281.2(c).

The instant case is analogous and directly on point with Birl v. Heritage Care, LLC (2009) 172 Cal. App. 4th 1313, where the Court considered facts identical to those presented in Plaintiff’s case regarding the applicability of the arbitration agreement to some parties and not others. The issue on appeal was whether a matter should be compelled to arbitration when there are third parties as well as causes of action that are not subject to the arbitration agreement. Id. at 1315. The Court affirmed the trial court’s ruling to not sever the claims against the nursing home defendant, Heritage, because to do so would create the possibility of conflict of rulings on common issues of law or fact if defendant Heritage was not joined in the court action with other defendants. Id. at 1319-1322.

The case in Birl involved claims of wrongful death, elder abuse, and other related causes of action brought against Kaiser/SCMPC and three nursing facilities, including Heritage. The court concluded that because the other codefendants in the action and third parties unaffected by the arbitration agreement and the plaintiffs alleged several causes of action in their individual capacity as third parties not bound by the arbitration agreement, the court found that the trial court did not misapply Code of Civil Procedure §1281.2(c), or abuse its discretion in refusing to enforce the arbitration agreement to avoid the possibility of conflicting rulings on common issues of law or fact. Id. at 1319-1320. The court noted that “different triers of fact in different proceedings could come to different and conflicting conclusions as to which party or parties were liable, and also could arrive at different conclusions in apportioning the amount of damages.” Id. at 1322. However, “if the trier of fact is the same for all defendants, as would occur if all defendants are joined in the court action, then the possibility of conflicting rulings concerning fault and apportionment of damages would not occur.” Id. at 1321.

Here, similar to Birl, Plaintiff has claim of Wrongful Death, Thus, the risk of conflicting rulings is substantial because all the claims brought by plaintiffs are contingent upon Defendants’ failure to provide Plaintiff with the care she was entitled to as an elderly citizen. Said failures implicate common questions of law and fact and thus give rise to the potential of conflicting rulings regarding the same. The claims in this case implicate issues such as the failure to prevent infections, pressure sores, falls, weight loss, including malnutrition, due to neglect, causing WILLIE’S death, which give rise to the possibility of conflicting rulings on common questions of law and fact, the exact result §1281.2(c) is designed to avoid.

Plaintiffs’ claims for Wrongful Death, (as no party agreed to arbitrate this cause of action) and /or Elder Abuse against third party co-defendants are not subject to arbitration and must remain in the trial court.

Defendants’ Petition should be denied to ensure that all of the Plaintiffs’ claims are resolved in the same forum, by the same trier of fact, and at the same time. This unity is required to avoid the very real possibility that Defendants could be found to have not been negligent at arbitration, but liable for Wrongful Death, and violations of Health & Safety Code §1430(b) at the time of trial. Since these claims arise from the same set of facts, hearing all matters before a Court of competent jurisdiction will avoid the possibility of conflicting rulings on common issues of law or fact. See, Los Angeles Unified Sch. Dist. v. Safety Nat’l Cas. Corp., No. B275597, 2017 WL 2963003 (Cal. Ct. App. July 12, 2017) and Birl v. Heritage Care, (2009) 172 Cal.App.4th 1313, 132

DO NOT SIGN PRE-DISPUTE ARBITRATION AGREEMENTS AND GIVE UP YOUR CONSTITUTIONAL RIGHT TO A TRIAL BY JURY!!!

Steven Peck, ESQ.

About the Author

For over 37 years, his dedication has been unyielding and his approach to client representation and care is deeply respected by his colleagues and clients alike. Steven Peck has extensive trial experience and has recovered millions of dollars in damages for clients in lawsuits.


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