Rankin v. Brinton Woods of Frankford, LLC

Sharer, J. Willie Charles, Jr. died during his brief stay as a patient at Brinton Woods of Frankford, LLC. Thereafter, appellants, Marcia Rankin, individually and as personal representative of her father's estate, Mark Allen, and Dawn Tracey brought, in the Circuit Court for Baltimore City, a negligence action for survival and wrongful death claims against several Brinton Woods entities. 1 Brinton Woods responded to the complaint by filing a motion to compel arbitration pursuant to provisions of the admission contract, which had been executed by Rankin on behalf of Mr. Charles. The circuit court ruled that Rankin had acted as her father's agent - on an apparent agency theory - when she executed the admission contract on his behalf and, therefore, the estate was bound by the arbitration agreement provisions. The court granted Brinton Woods' motion as to the survival claims, but denied the motion as to the wrongful death claims.

The Court ordered a stay of the wrongful death proceedings pending arbitration of the survival claims. The Estate asserts that the circuit court erred in granting Brinton Woods' petition to compel arbitration, based on its finding of apparent agency. 2 Alternatively, it asks this Court to hold the arbitration clause unenforceable as unconscionable. Because we shall hold that the circuit court erred in finding Rankin to have been Mr. Charles' agent, and therefore erred in ordering arbitration based on that finding, we shall reverse and remand the matter for further proceedings. Moreover, we find the arbitration provisions of the contract to be unconscionable and, therefore, unenforceable.

I. BACKGROUND Mr. Charles entered Brinton Woods Post-Acute Care Center on June 19, 2015. The day prior to his admission, Rankin executed an admission contract on his behalf. The contract included a clause that required all disputes that "arise[ ] regarding the care or treatment of the Resident while residing at this Facility," be submitted to a mediator for resolution. The resolution clause further provided that, if mediation efforts failed to resolve the disputes, "any controversy that remains unsettled after mediation[,]" must be submitted to an arbitration process. 3 The Estate's Complaint alleged that, while in the care of Brinton Woods, Mr. Charles developed serious health concerns including "painful pressure ulcers [bed sores ] and penile necrosis [gangrene ]," as a result of being deprived of adequate toileting, skin, and catheter care.

These adverse conditions were alleged to have been caused by Brinton Woods' negligence and, thus, responsible for having caused and expedited his death. Proceedings The Estate's Complaint was filed on November 14, 2016. Prior to answering the complaint, Brinton Woods filed a Petition to Compel Mediation and/or Arbitration and Motion to Dismiss or Stay Proceedings. Brinton Woods asserted that Rankin executed the admission contract as the health care agent for Mr. Charles, thus binding the Estate to the arbitration clause.

In the Estate's response, it argued that Rankin was not Mr. Charles' agent, and had neither actual nor apparent authority under his advance directive, or otherwise, to enter into an arbitration agreement on his behalf. Alternatively, it argued that the arbitration agreement was unconscionable and should not be enforced. Following a hearing, the circuit court issued a memorandum opinion and order granting Brinton Woods' petition as to the survival claim only and stayed the wrongful death claim. The motion to dismiss was denied.

Standard of Review When our review of a circuit court's decision involves both questions of fact and of law, we apply different standards of review to the questions of fact and to the questions of law. One of our considerations is whether [the signing party] was [the patient's] agent for purposes of binding him to the arbitration agreement. This is a factual determination that we review using the clearly erroneous standard. Under the clearly erroneous standard, we will not disturb the factual findings of the trial court [i]f there is any competent evidence to support th[ose] factual findings.

As to questions of law, both parties have presented legal arguments based on their interpretation of statutory and case law. We consider those arguments de novo ; in other words, we review the questions as a matter of law.... Dickerson v. Longoria , 414 Md. 419 , 432-33, 995 A.2d 721 (2010) (internal quotations and citations omitted). This case was heard below on Rankins's Motion to Dismiss Brinton Woods' Petition to Compel Arbitration.

Because enforceability of the arbitration agreement depends on whether Rankin was her father's agent and authorized to enter into such an agreement on his behalf, we review the circuit court's finding of apparent agency.

II

DISCUSSION 1. The Court's Agency Finding We have explained that, "[w]hen a party asserts a claim that is dependent upon an agency relationship created by inference, that party has the burden of proving the existence of the principal-agent relationship, including its nature and its extent." Jackson v. 2109 Brandywine, LLC , 180 Md. App. 535 , 565, 952 A.2d 304 (2008) (citing Hofherr v. Dart Industries, Inc. , 853 F.2d 259 , 262 (4th Cir. 1988) ). Agency is a question of fact and such a finding will not be disturbed unless it was clearly erroneous. See Dickerson , 414 Md. at 433 , 995 A.2d 721 .

The circuit court concluded that "Rankin had apparent authority to enter into the agreement with [Brinton Woods][,]" finding that, "[a]t the time the contract was signed, [Brinton Woods] had not yet evaluated the decedent's capacity and had no knowledge as to whether or not he was capable of entering into the contract himself." The court also found that the "Advance Directive was provided to the Defendant Brinton Woods at the time of admission to its facility." Additionally, the court found that Rankin "identified herself as both 'agent' and 'daughter' of her father[,]" and placed significance on the fact that " he moved into the facility ." (Emphasis in original). Based on those findings, the court concluded that "[Mr. Charles] was fully aware and complicit in allowing [Rankin] to act as his apparent agent, and that [Brinton Woods] reasonably relied on that apparent agency." At that juncture, the record before the circuit court consisted of, in addition to the pleadings: the initial complaint, with the attached Letters of Administration of a Small Estate and the Certificate of Merit and Report; the petition to compel arbitration, with the attached copy of the admission contract and the Daren Cortese 4 affidavit; the response opposing the petition, with a copy of the advance directive and Rankin's affidavit; and Brinton Woods' reply to the response opposing the petition. Brinton Woods' petition to compel arbitration, and supporting memorandum, asserted that Rankin "is identified in the Admission Contract as her father's agent[,]" and that "she had provided documentation to Brinton Woods identifying her as the health care agent of Mr. Charles." Those assertions were supported by repeated references to the Cortese affidavit and excerpts from the admission contract. The advance directive executed by Mr. Charles, referred to in the Cortese affidavit, however, was not appended to the petition. 5 The Cortese affidavit, relied on by Brinton Woods, does not in fact support those assertions or the court's finding that the advance directive had been provided to Brinton Woods at the time the admission contract was executed.

The affidavit, executed by Cortese as "President and Owner of Defendant Brinton Woods Health Care Center, LLC[,]" provides that the affiant is "familiar with the operations" and that he reviewed "materials relating to the admission" of Mr. Charles. (Emphasis added). Further, based on his review of those materials, he "can attest that the Admission Contract is a true and accurate copy of the Admission Contract from the Brinton Woods business records governing the admission [sic] Willie Charles, Jr." While the affidavit might have supported the accuracy of the copy of the admission contract provided from the business records, it does not support the circumstances surrounding the contract's execution or the receipt of the advance directive. The Cortese affidavit also affirms an inaccurate representation, purporting that the advance directive "authorized Ms. Rankin to make health care decisions on [Mr. Charles'] behalf[,]" which was contradicted by both Rankin's affidavit and the language of the advance directive itself, as it failed to include that such authority was conditioned on Mr. Charles being certified as incapable of making informed decisions regarding his own health care.

The language of the advance directive clearly established the condition precedent for its efficacy, by stating "[m]y agent's authority becomes operative when my attending physician and a second physician determine and certify in writing that I am incapable of making an informed decision regarding my health care ...." To this point, the circuit court correctly concluded that "Rankin did not have actual authority since the decedent's Advance Directive only conveyed actual authority to [Rankin] at such time that decedent was incapacitated." Notwithstanding that finding, the court appears to have relied on the advance directive and, possibly, the Cortese affidavit's reference, as evidence of Rankin's apparent agency. In support of its finding of Rankin's apparent agency, the court posed the rhetorical question: "Why else would [Rankin] have shown the Advance Directive to [Brinton Woods] if not to satisfy [it] that she had the ability/authority to sign the admissions contract?" The circuit court challenged the Estate's arguments during the petition hearing, stating that: It is disingenuous to argue, as Plaintiff's [sic] counsel did at the hearing, that the decedent was not aware that an admission contract of some kind was signed before he was admitted to Defendant Brinton Woods. To insist on one hand that he was totally competent as to invalidate the Advance Directive but not competent enough to know a nursing home would require signed paperwork before he moved into the facility seems inconsistent.... This finding, however, does not take into account the scope of the agency.

As the Dickerson Court noted, "an agent cannot extend his or her own authority beyond the authority granted to him or her by the principal." 414 Md. at 449 , 995 A.2d 721 (citation omitted). Further, the court's assumption that arbitration clauses are common in nursing home admission contracts, is a fact which the Dickerson Court acknowledged is not always the case. 6 There is an absence of evidence of past assent to the execution of an admission contract that contained an arbitration clause, or that such clauses are common in nursing home admission contracts, so that an applicant should reasonably expect an admission contract to contain such a clause. Brinton Woods does not suggest that Rankin represented that Mr. Charles had been certified incompetent and that she had the authority bestowed in the advance directive, as his health care agent. 7 As explained in the admission contract, advance directives are to assist in the making of "future medical treatment" decisions if the patient becomes incapable of doing so. 8 The complaint alleges that Mr. Charles was placed in Brinton Woods because his medical conditions "needed close medical and nursing supervision" that "required professional attention," so that he could "receive that specialized care." The complaint also alleges, and Brinton Woods does not contest, that prior to his admission, Brinton Woods "had full knowledge of Mr. Charles' medical condition[.]" As such, in the case of Mr. Charles, an advance directive would have been necessary if, or when, he was to become incapable of making a health care decision, and certified as such, while in the care of Brinton Woods. In Dickerson , the Court of Appeals qualified the applicability of the Health Care Decisions Act (HCDA), 9 stating that "the HCDA pertains only to 'health care decisions,' " and "establishes procedures by which an individual may make health care decisions to be carried out if he or she is unable to make those decisions for him or herself." 414 Md. at 435 , 995 A.2d 721 .

The "intent is demonstrated by the HCDA's mandate that treatment may only be provided, withheld, or withdrawn pursuant to the HCDA if the patient is incapable of making an informed decision regarding the treatment ." Id. (emphasis added) (internal quotations and citations omitted). Notwithstanding, the Dickerson Court also noted that "[n]othing in the HCDA ... restricts the ability of an individual to appoint a health care agent when, as in the present case, the individual who is to receive health care is apparently capable of making informed decisions on his or her own behalf." Id. (footnote omitted).

The circuit court found that Rankin, by crossing out the word "Resident" and writing the word "agent" below it on the contract, coupled with Mr. Charles' move into the facility, was "conduct by the principal which caused [Brinton Woods] to believe [Rankin] was authorized[.]" However, that action alone should not support the court's finding of what Brinton Woods "reasonably relied" on as evidence of an apparent agency, particularly in view of the existence of the advance directive. Brinton Woods asserts that the advance directive acted "as additional evidence to support [its] reasonable reliance on the apparent authority Mr. Charles invested in Ms. Rankin." It contends that "[t]he clearest indication that Mr. Charles authorized his daughter to reach a decision about a nursing facility in which he would reside was Mr. Charles moving into Brinton Woods the day after Ms. Rankin executed the Admission Contract." Brinton Woods also found support in the admission contract, where Rankin "acknowledged herself to be both 'agent' and 'daughter' of Mr. Charles[,]" and "had supplied [Brinton Woods] with a copy of the Advance Directive executed by her father in 2008." Brinton Woods attaches significance to the fact that "none of the terms of the Admission Contract became applicable unless Mr. Charles actually became a resident of the facility." The Estate disagrees and contends that, under Dickerson , agency law is inapplicable when the receipt of health care is conditioned on signing an arbitration clause and waiving the right to a jury trial. Rankin's apparent crossing out of the word "Resident" and writing the word "agent" below it on the contract does not alone support a finding that she held herself out as her father's agent. However, whether this act alone could be sufficient to support a nursing home's reasonable reliance on that act as evidence of her authority to execute an admission contract, is another issue.

As the Dickerson Court addresses, "[r]egardless of how she held herself out to others, [she] could not expand her own authority and bind [the applicant] to the arbitration agreement." 414 Md. at 449 -50 , 995 A.2d 721 . Other than Rankin's act of writing the word "agent" on the contract, there is little evidence that Mr. Charles had granted her the authority to make a health care decision on his behalf at the time she executed the admission contract, let alone one that also impacted his right to a trial. Before the motions court, Brinton Woods argued that Rankin "didn't say I don't have the authority to sign this [agreement][,]" and explained that "[w]hat they were presented with was an advance directive, ... and they were dealing with the person that's designated as the responsible party or acted as a responsible party." Brinton Woods argued further, claiming that "[a]dvanced directives are of no import[,]" and that it is, "at best, an indicia to the nursing home that the person before them has authority to sign the contract because that person has been designated by the resident to act if the resident becomes incapacitated." Brinton Woods continued that "the best evidence of actual authority is how did the parties comport themselves after the contract was signed[;] [t]hey moved the resident in [sic] the facility." Even were we to accept the court's apparent agency finding, the question remains: Did that apparent authority extend to the execution of an admission contract that contained a binding arbitration clause? Existence of a Binding Arbitration Agreement When interpreting an arbitration clause in a contract, we follow the objective law of contract interpretation.

Freedman v. Comcast Corp. , 190 Md. App. 179 , 192, 988 A.2d 68 (2010). As such, we "must first determine from the language of the agreement itself what a reasonable person in the position of the parties would have meant at the time it was effectuated.... In these circumstances, the true test of what is meant is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant...." Id. (quoting Koons Ford of Balt., Inc. v. Lobach , 398 Md. 38 , 47, 919 A.2d 722 (2007) ).

The circuit court relied heavily on Dickerson, supra , to support its finding that "[t]he decedent's access to and receipt of health care was subject to the completion of the full admission agreement, including the agreement to arbitrate." The court also found that Rankin, "acting as decedent's agent, made a health care decision on behalf of the decedent to admit him into [Brinton Woods], which included accepting on behalf of the decedent the obligation to participate in arbitration." Brinton Woods agrees with the court's conclusions, averring that "the Circuit Court properly concluded that execution of the Admission Contract constituted a health care decision." It claimed that Rankin's "decision to execute the Brinton Woods agreement as written therefore constituted her decision to admit her father to that facility, a health care decision." The Estate contends that the court "committed reversible error by holding in the absence of a valid and in-effect Advanced Directive or Power of Attorney, [Rankin] was the apparent agent of her father authorized to make a health care decision on his behalf - the signing of the admission contract -- [sic] and bind her father to an arbitration agreement, thereby waiving his jury trial rights." For support, the Estate focuses on the language in Dickerson , where the Court of Appeals concluded that, neither a power of attorney nor any other advance directive is required to bind a nursing-home resident to an arbitration agreement included in nursing-home admission documents when, as in this case, signing the arbitration agreement is not a prerequisite to admission to the nursing home . 414 Md. at 431 -32 , 995 A.2d 721 (emphasis added). The Estate interprets this language to mean that "if signing the arbitration agreement was a prerequisite to admission, then a valid power of attorney or advanced directive would be required because it would involve a health care decision." With that in mind, the Estate asserts that "[a]pparent agency law is inapplicable to arbitration agreements when receipt of health care is conditioned on signing an arbitration agreement and waiving jury trial rights." Further, it contends that, absent a document granting such authority, "the actual recipient, if competent, of the prospective health care must sign the arbitration agreement/paperwork[.]" The Maryland Uniform Arbitration Act " 'expresses the legislative policy favoring enforcement of agreements to arbitrate[.]' " Fraternal Order of Police, Montgomery Cty. Lodge 35 v. Montgomery Cty. , 216 Md. App. 634 , 641, 88 A.3d 887 (2014) (quoting Allstate Ins. Co. v. Stinebaugh , 374 Md. 631 , 641, 824 A.2d 87 (2003) ).

" 'Arbitration is a process whereby parties voluntarily agree to substitute a private tribunal for the public tribunal otherwise available to them.' " Schneider Elec. Bldgs. Critical Sys., Inc. v. Western Sur. Co. , 454 Md. 698 , 706, 165 A.3d 485 (2017) (emphasis in original) (quoting Hartford Accident & Indem.

Co. v. Scarlett Harbor Assocs. Ltd. P'ship ( Scarlett Harbor ), 346 Md. 122 , 127, 695 A.2d 153 (1997) ). Because " '[a]rbitration is consensual[,] ... only those who consent are bound[.]' " The Redemptorists v. Coulthard Servs., Inc. , 145 Md. App. 116 , 134, 801 A.2d 1104 (2002) (quoting Scarlett Harbor , 346 Md. at 127 , 695 A.2d 153 ). While