Amos v. North Hill Nursing and Rehabilitation Center LLC
MEMORANDUM OPINION AND ORDER RE 5 MOTION to Compel Arbitration and, in the Alternative, Motion to Dismiss is DENIED. Signed by Judge Abdul K Kallon on 10/10/2018. (AFS)
2018 Oct-10 PM 01:01
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
STEPHANIE AMOS, as
Daughter, Next Legal Friend, and
Lawful Guardian of PATRICIA
ANN HARRIS, An Incapacitated
Civil Action Number
NORTH HILL NURSING AND
LLC, et al.,
MEMORANDUM OPINION AND ORDER
Stephanie Amos filed this lawsuit against North Hill Nursing and Rehabilitation
Center, LLC and various other related entities, asserting claims of negligence,
wantonness, and breach of contract on behalf of her mother, Patricia Ann Harris, an
incapacitated person. Based on an admission agreement signed by Ms. Amos as Ms.
Harris’ authorized representative in which Ms. Harris agreed to submit all claims to
arbitration, North Hill filed a motion to compel arbitration and to stay pursuant to the
Federal Arbitration Act (hereinafter “FAA”), 9 U.S.C. §§ 2 and 3, or to dismiss this
action without prejudice. Doc. 5. At issue here is whether Ms. Amos, who did not
have legal guardianship over her mother at the time, had the requisite legal authority
to bind her mother to an arbitration agreement. After consideration of the parties’
briefs, docs. 6, 8, 9, and 10, the record, and applicable law, the court concludes that
North Hill’s motion is due to be denied.
STANDARD OF REVIEW
When presented with a motion to compel arbitration, “a district court, rather
than a panel of arbitrators, must decide whether a challenged agreement to arbitrate
is enforceable against the parties in question.” Magnolia Capital Advisors, Inc. v.
Bear Stearns & Co., 272 F. App’x 782, 785 (11th Cir. 2008) (citing Chastain v.
Robinson-Humphrey Co., 957 F.2d 851, 854 (11th Cir. 1992)). The party opposing
a motion to compel arbitration must “‘substantiate the denial of the contract with
enough evidence to make the denial colorable.’” Magnolia Capital Advisors, Inc.,
272 Fed. App’x at 785 (quoting Wheat, First Secs., Inc. v. Green, 993 F.2d 814, 819
(11th Cir. 1993)) (alteration in original omitted). In other words, the opposing party
must “present evidence that the arbitration agreement is not valid or that it does not
apply to the dispute in question,” to create an issue regarding the enforceability of the
purported arbitration agreement. See Campbell v. CitiFinancial Mortgage Co., Inc.,
No. CV-06-BE-0302-E, 2006 WL 8436895, at *1 (N.D. Ala. June 2, 2006) (citing
Kenworth of Birmingham, Inc. v. Langley, 828 So. 2d 288, 290 (Ala. 2002)). As with
the inferences in ruling on a motion for summary judgment, the district court should
draw all reasonable inferences in favor of the nonmovant. See Magnolia Cap.
Advisors, Inc., 272 F. App’x at 786. If the opposing party has not requested a jury
trial, “the court shall hear and determine such issue,” pursuant to the FAA, 9 U.S.C.
The Eleventh Circuit applies a summary judgment standard when considering
a motion to compel arbitration. The court will decide, as a matter of law, whether the
parties entered into an arbitration agreement only if “‘there is no genuine dispute as
to any material’ fact concerning the formation of such an agreement.” Bazemore v.
Jefferson Capital Sys., LLC, 827 F.3d 1325, 1333 (11th Cir. 2016) (quoting Fed. R.
Civ. P. 56(a)). A dispute is considered genuine if it is supported by the evidence
presented or is created by evidence that is significantly probative. See id. at 1333
(citing Baloco v. Drummond Co., 767 F.3d 1229, 1246 (11th Cir. 2014)).
North Hill operates a nursing home and rehabilitation facility. See doc. 1-1 at
9. In April 2015, Ms. Amos took her mother Ms. Harris to North Hill and had her
admitted. See doc. 10-1 at 3. At the time, Ms. Harris was under the protective services
of the Mobile County Department of Human Resources due to severe cognitive issues
associated with dementia. See id. As part of the admission, Ms. Amos signed the
relevant paperwork, which included an Arbitration Agreement and Jury Trial Waiver,
as her mother’s authorized representative. Doc. 6-2 at 5, 20, 24–28. North Hill defines
an authorized representative as “the person who has authority to execute this
agreement for and on behalf of the resident and who agrees to be responsible to assist
the resident in meeting his/her obligations under this Agreement.” Id. at 5.
Three years after she admitted her mother to North Hill, Ms. Amos obtained
Temporary Letters of Guardianship in the matter of the estate of her mother. See doc.
10-2 at 2. Ms. Amos subsequently filed this lawsuit in the Circuit Court of Jefferson
County, Alabama on behalf of her mother, alleging negligence, wantonness, and
medical malpractice against North Hill. See doc. 1-1. Defendants removed this action
pursuant to 28 U.S.C. § 1441 et seq., and now seek to stay or dismiss the case pending
arbitration of the claims.
The FAA establishes that a contract involving interstate commerce that includes
an arbitration provision is valid and enforceable. See 9 U.S.C. § 2. In the Eleventh
Circuit, determining the validity of any particular arbitration agreement “is generally
a matter of state law.” See Entrekin v. Internal Medicine Associates of Dothan, P.A.,
689 F.3d 1248, 1251 (11th Cir. 2012) (quoting Stolt-Nielsen S.A. v. Animal Feeds Int’l
Corp., 559 U.S. 662, 681 (2010)). Under Alabama law, North Hill bears the burden
of establishing that a valid arbitration provision exists and that it applies to the claims
alleged here. See Kenworth of Birmingham, 828 So. 2d at 290.
To support its contention that this lawsuit is subject to arbitration, North Hill
argues that courts “have routinely compelled arbitration of disputes between skilled
nursing facilities and residents where contracts at issue were signed by either the
resident or the resident’s representative.” Doc. 6 at 6. While the court accepts that,
generally, the signature of an authorized representative is sufficient to bind a thirdparty to an arbitration agreement, Alabama law provides a separate standard for
nursing home residents who are mentally incompetent. More specifically, “[c]hildren
and the mentally incompetent have traditionally been treated differently under the law
than the standard competent adult.” Diversicare Leasing Corp. v. Hubbard, 189 So.
3d 24, 35 (Ala. 2015) (citing Ex parte E.R.G., 73 So. 3d 634, 678 (Ala. 2011) (Main,
J., dissenting)). Therefore, because it is undisputed that Ms. Harris was mentally
incapacitated when she entered North Hill, see doc. 10-1 at 3, the validity of the
arbitration agreement turns on whether Ms. Amos had sufficient legal authority to
bind Ms. Harris.
Whether Ms. Amos Had the Legal Authority to Bind Ms. Harris to an
Generally, Alabama courts follow the principle that “a nonsignatory to an
arbitration agreement cannot be forced to arbitrate her claims.” Cook’s Pest Control,
Inc. v. Boykin, 807 So. 2d 524, 526 (Ala.2001). Therefore, to enforce the agreement,
North Hill must prove that Ms. Amos had the authority to bind Ms. Harris. In that
respect, North Hill principally relies on Owens v. Coosa Valley Healthcare, Inc., 890
So. 2d 983 (Ala. 2004), a case involving a daughter who signed the arbitration
agreement as her mother’s legal guardian and sponsor. The Owens court found that
the nonsignatory patient was “clearly designated on the signature page” of the
arbitration agreement and upheld the arbitration clause between the nursing home and
the nonsignatory resident. Id. at 987.
Here, however, Ms. Amos signed the North Hill documents as an authorized
representative and left the space for “Resident” unsigned. See doc. 6-2 at 20. Unlike
a legal guardian, the duties of an authorized representative primarily relate to financial
obligations in the event of nonpayment of the resident’s fees. See id. at 5–6. As such,
when Ms. Amos executed the admission documents, she effectively did so as Ms.
Harris’ responsible party rather than as a legal guardian. Under those circumstances,
the Supreme Court of Alabama has held that signing as the responsible party on a
nursing-home arbitration agreement was ineffective to bind the resident to the
agreement. Noland Health Services, Inc. v. Wright, 971 So. 2d 681, 686 (Ala. 2007).
Moreover, Ms. Amos lacked the legal authority to bind Ms. Harris. North Hill
does not dispute that, at the time of admission, Ms. Harris was under the protective
services of Mobile County Department of Human Resources. There is nothing in the
record that indicates that Ms. Amos had a durable power of attorney when she
executed the admission records as Ms. Harris’ authorized representative. In fact, the
admission documents recognize implicitly that the authorized representative may, in
fact, not be the power of attorney or Guardian: “the Authorized Representative
confirm[s] and warrant[s] that they have provided the Facility with a complete list of
the Resident’s current Agents, and copies of all attorneys in fact (Powers of Attorney),
if any, Guardianship Commissions or other documents, if any . . . .” Doc. 6-2 at 6. In
other words, the ‘if any’ language implies that North Hill recognizes that an
authorized representative may not have legal guardianship or a durable power of
attorney over the patient. Therefore, the reliance on the authorized representative
language to argue that Ms. Amos had legal authority to bind her mother is unavailing.
Whether Ms. Amos has provided Evidence of Ms. Harris’ Mental
Incompetence at the time of her Admission to North Hill
Ms. Amos argues also that Ms. Harris’ documented mental incompetence
precludes her from having the capacity to grant Ms. Amos the right to act on her
behalf. It is undisputed that Ms. Harris was mentally incompetent at the time of her
admission. As such, she is “unable to empower an agent, whether passively or
through affirmative acts.” SSC Montgomery Cedar Crest Operating Co., LLC v.
Bolding, 130 So. 3d 1194, 1199 (Ala. 2013) (citation omitted). North Hill seeks to get
around this fact by arguing apparent authority, i.e. that Ms. Amos “represented she
had the authority to bind their respective parties . . . to this Agreement.” Doc. 6 at 4.
Apparent authority requires, however, the capacity to consent by the principal – in this
case Ms. Harris: “[a]pparent authority is implied where the principal passively permits
the agent to appear to a third person to have the authority to act on [her] behalf.”
Treadwell Ford, Inc. v. Courtesy Auto Brokers, Inc., 426 So. 2d 859, 861
(Ala.Civ.App. 1983). North Hill cannot make this showing because, at the time of her
admission, Ms. Harris lacked the capacity to authorize Ms. Amos to act on her behalf..
See, e.g., Noland, 971 So. 2d at 687 (plurality held that a mentally incompetent
nursing home resident could not authorize anyone to contract on his behalf).
North Hill’s reliance on Carraway v. Beverly Enters. Alabama, Inc., where the
Court upheld an arbitration agreement because there was no evidence that the resident
objected to her brother admitting her to a nursing home, 978 So. 2d 27 (Ala. 2007),
is misplaced. Here, Ms. Harris was, and remains, unable to affirmatively or passively
approve of Ms. Amos’ assent to an arbitration agreement on her behalf. Under
Alabama law, only the court has the power to enter into contracts on behalf of an
incapacitated person. See Ala. Code (1975) § 26-2A-136(b)(3).
Similarly, Entrekin is also of no help to North Hill. The nursing home patient
in Entrekin signed the agreement and was mentally sound at the time of admission.
See 689 F.3d at 1249. In contrast, where, as here, a patient is mentally incompetent,
Alabama courts have repeatedly held that one who signs as the next friend is “‘wholly
without authority to make any contract that would bind [the resident] or her estate.’”
Diversicare Leasing Corp., 189 So. 3d at 35 (quoting Noland Health Servs., 971 So.
2d at 686). Put differently, a nursing home resident with mental impairments cannot
be compelled to arbitrate based on an agreement signed on her behalf by an
unauthorized third party. See id. at 37. See also Bolding, 130 So. 3d at 1199; Noland,
971 So. 2d at 690.
By signing as the authorized representative, Ms. Amos merely acted as Ms.
Harris’ responsible party, which is insufficient under Alabama law to bind Ms. Harris
to an arbitration agreement. As such, the arbitration agreement between North Hill and
Ms. Harris is invalid as a matter of law. Accordingly, the Motion to Compel
Arbitration, doc. 5, is DENIED.
DONE this 10th day of October, 2018.
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE
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