Sager v. Sunbridge Healthcare Corporation

Filing 39

ORDER: Defendant's 16 Motion to Dismiss or in the Alternative to Stay is DENIED. Signed by Judge Janet Bond Arterton on July 7, 2011. (Kretman, J.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
Gwen Sager, Executrix of the Estate of Marilee Sager
Plaintiff,

Civil No. 3:10cv1292 (JBA)

v.
Harborside Connecticut Limited Partnership, d/b/a
Arden House,
Defendant.

July 7, 2011

RULING ON MOTION TO DISMISS
Plaintiff Gwen Sager, the daughter and executrix for the Estate of Marilee Sager (the
“decedent”), sued Harborside Connecticut, a New Mexico–incorporated limited partnership
that operated Arden House Care and Rehabilitation Center in Hamden, Connecticut, a
for–profit chronic and convalescent nursing home licensed by the state of Connecticut.
Plaintiff claims that Defendant’s negligent care of the decedent, its resident, resulted in her
death. Defendant removed this case to federal court claiming diversity jurisdiction and now
moves to dismiss pursuant to Fed. R. Civ. P. 12(b)(1), or alternatively to compel arbitration
and stay proceedings. Because Defendant has failed to demonstrate the existence of a
properly executed contract that would require arbitration of this claim, Defendant’s motion
will be denied.

I.

Background1
After a fall at her home on March 13, 2008, Marilee Sager, a brittle diabetic who

received care and treatment at the Hospital of Saint Raphael, was discharged to Arden House
for short–term rehabilitation. She resided at Arden House between March 13, 2008 and
April 22, 2008.
On March 18, 2008, Arden House presented Plaintiff with its Admissions
Agreement, which had as the last of eleven attachments an arbitration agreement (Long
Term Care Arbitration Agreement, Ex. 3–C, the “Arbitration Agreement” ). Plaintiff signed
the Admissions Agreement and separately signed the Arbitration Agreement on March 21,
2008 as “Resident’s Legal Representative” and returned the two documents to Arden House
on March 24, 2008.2
The Arbitration Agreement provides
Any and all claims or controversies arising out of or in any way relating to
this Agreement, the Admission Agreement or any of the Resident’s stays at
this Facility . . . whether or not related to medical malpractice, including but
not limited to disputes regarding the making, execution, validity,
enforceability, voidability, unconscionability, severability, scope,
interpretation, preemption, waiver, or any other defense to enforceability of
1

In adjudicating a motion under Rule 12(b)(1) for lack of subject–matter
jurisdiction, a court may consider material outside the pleadings, including “by affidavit or
otherwise.” Kamen v. Am. Tel & Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986). Reference to
outside material, however, should not include “conclusory or hearsay statements contained
in the affidavits.” J.S. ex rel N.S. v. Attica Cent. Sch., 386 F.3d 107, 110 (2d Cir. 2004).
2

Plaintiff also signed and returned to Arden House a form titled Resident Admission
Record and Agreement (Ex. 3–D to Mem. Supp.), a “Self–Determination Act,” on which
Plaintiff noted that the decedent has executed “Durable Power of Attorney” (Ex. 3–E to id.),
a Medicare Secondary Payer Form, on which Plaintiff noted that she was signing as “P.O.A.”
(Ex. 3–F to id.), and a form appointing a representative for Social Security claims, on which
Plaintiff also wrote “P.O.A.” (Ex. 3–G to id.).
2

this Agreement or the Admission Agreement, whether arising out of State or
Federal law, whether existing now or arising in the future, whether for
statutory, compensatory or punitive damages and whether sounding in
breach of contract, tort, or breach of statutory duties . . . regardless of the
basis for the duty or of the legal theories upon which the claim is asserted,
shall be submitted to binding arbitration
(Ex. C to Mot. Supp. [Doc. # 174] at Attachment K.) Section 4 of the Arbitration
Agreement, provides that “[b]y signing this Agreement, the Parties are giving up and
waiving their right to have any Dispute decided in a court of law before a judge and/or jury.”
Section 8 of the Arbitration Agreement, titled “Voluntary Agreement” further provides that
“[i]f you do not accept this Agreement, you will still be allowed to live in, and receive
services in, this Facility.” (Id.)
The following condition is at the top of the signature page of the Arbitration
Agreement:
By signing below, the undersigned parties confirm that each of them has read
all seven (7) pages of this agreement and understands that each has waived
his/her or its rights to a trial, before a judge and/or a jury, and that each of
them voluntarily consents to all of the terms of this agreement.
(Id. at 7 (emphasis in original).)3 The signature page includes lines for the “Resident’s”
printed name and signature, and Marilee Sager’s name is typed on the “Resident” name line.
However, the “signature of Resident” line is blank. (Id.) The Arbitration Agreement
signature page also includes two signature sections for the legal representative to sign:
“Signature of Resident’s Legal Representative in his/her Individual Capacity,” and “Signature
of Resident’s Legal Representative in his/her capacity as . . . power of attorney, legal
guardian, health care surrogate, or designee/authorized agent of Resident,” directing a

3

The Facility Representative Lisa Oppenheimer signed on March 17, 2008.
3

check–off of the applicable representative capacity. (Id.) Plaintiff checked her representative
capacity as “power of attorney,” but left the signature line blank. The Arbitration Agreement
contains a footnote that states “Resident’s Legal Representative must sign on both lines above
containing the phrase ‘Resident’s Legal Representative.’” (Id. (emphasis in original).) It also
has a signature line for “a Witness to Resident Designating or Authorizing Legal
Representative to sign on Resident’s Behalf,” to “attest that the Resident, in an alert and
oriented state of mind, designated and/or authorized, in the witness’s presence, the above
named legal representative to sign these agreements on behalf of the Resident.” (Id.) This
witness–signature line is also not signed on the Arbitration Agreement.
In this lawsuit, Plaintiff–executrix claims that Defendant’s negligent care of her
mother during her in–patient stay resulted in progressive dehydration, severe weight loss,
prolonged nausea, vomiting and abdominal pain, progressive lethargy, and inadequate
nutrition, and “[a]s a result of this deterioration, caused by the negligence of the defendant,
Marilee Sager died on April 26, 2008.” (Am. Compl. [Doc. # 20] ¶ 21.) In light of the
deficiencies in execution of Arbitration Agreement, Plaintiff refuses to arbitrate this claim,
absent court order. (Ex. 5 to Mem. Supp.)
II.

Discussion
Defendant moves to dismiss for lack of subject–matter jurisdiction pursuant to Fed.

R. Civ. P. 12(b)(1) on the basis that the parties are bound to arbitrate this dispute, or
alternatively, to compel arbitration pursuant to the Federal Arbitration Act (“FAA”), 9
U.S.C. § 3, et seq. Plaintiff argues that because she did not sign the Arbitration Agreement
in a representative capacity, and no witness signed it, there is no agreement between the
parties that would compel arbitration.
4

Preliminarily, Defendant argues that under Rent–a–Center v. Jackson, No. 09–497,
561 U.S. __, 130 S. Ct. 2772, 2778 (2010), whether the Arbitration Agreement compels
arbitration despite its signature deficiencies is a question for the arbitrators.4 However,
Rent–a–Center explicitly addressed only challenges to the validity of contracts and
arbitration agreements therein, not the “issue [of] whether any agreement between the
parties ‘was ever concluded.’” Id. at 2778, n.2 (citing Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440, 444 & n.1 (2006) (“The issue of the contract's validity is different
from the issue whether any agreement between the alleged obligor and obligee was ever
concluded.”)). Because the lack of signatures on the Arbitration Agreement implicates the
question of whether an “agreement between the parties ‘was ever concluded,’” and not the
validity of a contract that has entered into force, Rent–a–Center is inapposite, and the Court
will address whether the parties executed an enforceable Arbitration Agreement.5
Plaintiff maintains that the Arbitration Agreement never entered into force because
she signed it only in her individual capacity and not in her legal–representative capacity, and
it lacked the signature of an attesting witness as explicitly required by the Arbitration
Agreement. Defendant argues that despite these omissions Plaintiff nonetheless had implied
authority to agree to arbitrate on behalf of the decedent because she had executed other
4

In Rent–a–Center the Supreme Court concluded that where the plaintiff challenged
the validity of the contract that contained the arbitration agreement as a whole, the question
of the arbitration provision’s validity was to be determined by the arbitral panel; however,
it also held that where a party challenges the validity “of the precise agreement to arbitrate
at issue, the federal court must consider the challenge before ordering compliance with that
agreement under § 4.”
5

Even if Plaintiff did challenge the validity of the Arbitration Agreement and not
whether it was entered into, Rent–a–Center does not mandate that challenge be decided by
an arbitral panel, because it is a challenge to the “precise agreement to arbitrate at issue.”
5

documents on which she represented that she was exercising power of attorney on behalf of
the decedent. Defendant relies on several cases finding enforceable arbitration agreements
executed by individuals acting with implied authority on behalf of residents in hospice care.
See, e.g., Ruesga v. Kindred Nursing Ctrs., LLC, 161 P. 3d 1253, 1263 (Ariz. Ct. App. 2007)
(signature of wife on arbitration agreement on behalf of her incapacitated husband bound
them to arbitration, because in medical records spanning seventeen years the wife had
executed documents on behalf of her husband, and other documents showed the husband’s
consent to his wife’s control of his care and his insurance matters); Carraway v. Beverly
Enter. Alabama, Inc., 978 So. 2d 27, 31 (Ala. 2007) (based on evidence that a decedent
approved a legal representative acting on her behalf, that representative’s signature on the
arbitration agreement was binding); Broughsville v. OHECC, LLC, No. 05CA008672, 2005
WL 3483777 (Ohio App. Dec. 21, 2005) (daughter of respite–care resident with mild
dementia had apparent authority to bind resident to arbitration of her negligence claim
against nursing home, where daughter signed arbitration agreement on her behalf in her
presence, resident made no attempt to stop daughter, to ask questions of facility, or to
request to read document, and facility knew of relationship between resident and daughter,
having provided previous respite care for the resident, and absent indication that resident
was incompetent at time of admission or that she was suffering a period of confusion at the
time the daughter signed).
However, whether Plaintiff had implied authority as legal representative for the
decedent and could properly execute power of attorney is not implicated by Defendant’s
motion to dismiss. Assuming that Plaintiff executed other agreements as the decedent’s legal
representative and had durable power of attorney, the undisputed fact remains that Plaintiff
6

did not sign the Arbitration Agreement in that capacity, as the Arbitration Agreement
explicitly requires: “Resident’s Legal Representative must sign on both lines above containing
the phrase ‘Resident’s Legal Representative’” (emphasis in original). As Plaintiff’s counsel
noted during oral argument, where implied authority was sufficient for the other agreements
signed by Plaintiff in a representative capacity, this Arbitration Agreement required actual
authority, since it was the only agreement that expressly required signatures in two capacities
—individual and representative—and required the signature of a witness attesting to the
decedent’s grant of authority to her representative. Lacking these required formalities, the
parties did not properly execute the Arbitration Agreement, and Plaintiff is not required to
arbitrate this dispute.
Defendant also argues that because the decedent was a third–party beneficiary of the
Arbitration Agreement and received the benefits of that contract, the decedent and estate
are equitably estopped from refusing to comply with the Arbitration Agreement. However,
by its terms, the Arbitration Agreement was a “voluntary agreement,” that provided that
even “[i]f you do not accept this Agreement, you will still be allowed to live in, and receive
services in, this Facility.” In other words, Arden House did not require the decedent or
Plaintiff to sign the Arbitration Agreement to receive care, and the care the decedent
received was not a benefit of or conditioned on execution of the Arbitration Agreement.
(See Oppenheimer Aff. at ¶ 14.) Therefore, Plaintiff’s claims are not barred by equitable
estoppel.

II.

Conclusion
7

Accordingly, Defendant’s [Doc. # 16] Motion to Dismiss or in the Alternative to Stay
Proceedings and Compel Arbitration is DENIED.

IT IS SO ORDERED.

/s/
Janet Bond Arterton, U.S.D.J.
Dated at New Haven, Connecticut this 7th day of July, 2011.

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