Testa v. Emeritus Corporation

Filing 18

MEMORANDUM Opinion and Order signed by the Honorable Edmond E. Chang on 9/4/2015: For the reasons explained in the Opinion, supplemental briefing is needed before deciding the motion to compel 8 . The parties must submit additional briefing on the i ssue of Joseph Testa's actual, express authority (the only remaining basis to find a basis for authority) to bind Samuel Testa to arbitration on the basis of the Illinois power of attorney and the Arizona power of attorney. Emeritus shall submit its brief, addressing this issue only, by 09/18/2015. Joseph Testa shall respond by 10/02/2015. Emeritus may file a reply no later than 10/09/2015. Emailed notice(Chang, Edmond)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JOSEPH TESTA, on behalf of
SAMUEL J. TESTA
Plaintiff,
v.
EMERITUS CORPORATION,
d/b/a EMERITUS AT ORLAND PARK,
Defendant.

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No. 15 C 02449
Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER
Plaintiff Joseph Testa brings this personal-injury action on behalf of his
father, Samuel Testa, to recover monetary damages for harms Samuel allegedly
suffered during his stay at Emeritus at Orland Park, an assisted living facility
operated by Defendant Emeritus Corporation. The lawsuit was originally filed in
the Circuit Court of Cook County, but Emeritus properly removed it. R. 1, Not.
Removal.1 Emeritus believes that the claims in the action are subject to arbitration,

1Citations

to the docket are noted as “R.,” followed by the entry number. The Court
has subject-matter jurisdiction based on diversity of the parties under 28 U.S.C. § 1332.
Specifically, Joseph and Samuel are citizens of Illinois, and Emeritus is considered a citizen
of Washington because it is incorporated and maintains its principal place of business
there. Not. Removal at 2. A defendant in a removed case may establish the required
amount-in-controversy for diversity jurisdiction with a good-faith estimate of the stakes, so
long as that estimate is plausible and supported by a preponderance of the evidence.
Oshana v. Coca-Cola Co., 472 F.3d 506, 511 (7th Cir. 2006). Emeritus’s estimation that the
jurisdictional amount is satisfied is both plausible and supported by a preponderance of the
evidence. Joseph’s attorney’s affidavit alleged damages “in excess of $50,000.00.” R. 1, Exh.
A., Affidavit of Damages. And given the nature of the injuries alleged, which include a
number of falls, resulting in fractured bones, as well as a stroke, see R. 1, Exh. A., State
Court Compl. ¶¶ 8-19, it is not legally impossible that the total of damages alleged would
surpass $75,000. Because it is not “legally impossible” that the value of the lawsuit to

which it moves to compel as well as to stay judicial proceedings. R. 8, Def.’s Mot. For
the reasons explained below, although some of the parties’ arguments are rejected,
the Court needs supplemental briefing before definitively deciding Emeritus’s
motion.
I. Background
The relevant facts are not in dispute. Samuel Testa was admitted to
Emeritus at Orland Park (the Opinion refers to both the facility itself and the
company as “Emeritus”) on October 25, 2012. Compl. ¶ 5. On November 1, 2012,
exercising a power of attorney for his father, Joseph Testa executed an “Assisted
Living Establishment Contract” governing the terms of Samuel’s residence at
Emeritus. See R. 8, Exh. 2, Establishment Contract. Three weeks later, on
November 22, Joseph signed, as Samuel’s “Authorized Representative,” another
agreement with Emeritus. R. 8, Exh. 1, Arbitration Agreement. The agreement is
entitled, “Agreement to Resolve Disputes by Binding Arbitration,2 and it states in
relevant part that:
any action, dispute, claim or controversy of any kind, whether in contract
or in tort, statutory or common law, personal injury, property damage,
legal or equitable or otherwise, arising out of the provision of assisted
living services, healthcare services, or any other goods or services
provided under the terms of any agreement between the Parties, including
disputes involving the scope of this Arbitration Agreement, or any other
dispute involving acts or omissions that cause damage or injury to either
Joseph exceeds $75,000, the amount-in-controversy requirement is satisfied and removal
was proper. Back Doctors Ltd. v. Metropolitan Property and Cas. Ins., 637 F.3d 827, 829-30
(7th Cir. 2011).
2 The

pleadings do not state that it was Emeritus that drafted the Arbitration
Agreement for the parties to sign, but this fact is offered by both sides in their respective
briefs. See R. 11, Pl.’s Resp. Br. at 2; R. 12, Def.’s Reply Br. at 11.

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Party, except for matters involving evictions, shall be resolved exclusively
by binding arbitration and not by lawsuit or resort to the judicial process,
except to the extent that applicable law provides for judicial review of
arbitration proceedings.
R. 8, Exh. 1, Arbitration Agreement at 1 (emphasis in original). The Arbitration
Agreement further provides that “[a]dmission to [Emeritus] is not contingent upon
signing this Agreement.” Id. at 2. No representative of Emeritus evidently signed
the Agreement. See id. (“Community Representative Signature” line left blank).
Before Joseph signed either the Establishment Contract or the Arbitration
Agreement on his father’s behalf, Samuel had given Joseph two powers of attorney:
an Illinois Statutory Short Form Power of Attorney for Health Care (“Illinois POA”)
dated June 2010, R. 12, Exh. B Illinois POA, and a durable power of attorney
entered into under Arizona state law and dated March 2001 (“Arizona POA”), R. 12,
Exh. A, Arizona POA. The purpose of the Illinois POA, according to its own terms in
a prefatory notice, is to give Joseph “broad powers to make health care decisions,
including … to require, consent to or withdraw any type of personal care or medical
treatment for any physical or mental condition and to admit [Samuel] to or
discharge [him] from any hospital, home or other institution.” Illinois POA at 1.
Consistent with this purpose, Section 1 of the Illinois POA gives Joseph the
authority to make “personal care, medical treatment, hospitalization, and health
care” decisions. Id. The Illinois POA also specifies that it “is intended to be as broad
as possible so that [Joseph] will have authority to make any decision [Samuel] could
make to obtain or terminate any type of health care.” Id. at 2. It then goes on to list
excerpts from the Illinois Power of Attorney for Health Care Law, including a

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provision that, relevant here, reads, “The agent may sign and deliver all
instruments, negotiate and enter into all agreements and do all other acts
reasonably necessary to implement the exercise of the powers granted to the agent.”
Id. at 5 (quoting Section 4-10 of Illinois Power of Attorney Act, provision concerning
statutory short form power of attorney for health care, 755 ILCS 45/4-10(c)).
The Arizona POA has two operative articles, granting powers over
“asset control” and “health care decisions.” Article 1 states broadly that Joseph
“shall have full power and authority to do any and all acts for [Samuel’s] benefit
which [Samuel] might do if [he] were present.” Arizona POA at 2. Several examples
of such acts are then listed, “by way of illustration but not by way of limitation,”
including “to ask, demand, sue for … sums of money,” “to sell, assign, and transfer
stocks” and other securities, “to borrow money,” “to manage real property,” and “to
make and verify income tax returns.” Id. at 2-3. One other expressly listed act is “to
retain counsel on [Samuel’s] behalf, to appear for [him] in all actions and
proceedings to which [he] may be party in the courts of Arizona or elsewhere, to
commence actions and proceedings in [his] name and to sign and verify [his] name
on all complaints, petitions, answers and other pleadings of every description.” Id.
at 3.
In January 2015, Joseph filed suit on behalf of Samuel in Cook County
Circuit Court, alleging that Samuel—who left Emeritus in March 2014—had
suffered physical injuries, including fractured bones, as a result of Emeritus’s
negligence during his stay. Compl. ¶¶ 8-19, 23-27. Emeritus properly removed the

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action to this Court in March 2015, Not. Removal, and now moves to compel
arbitration and stay judicial proceedings under the arbitration agreement that
Joseph signed on November 22, 2013. Def.’s Mot.
II. Legal Standard
Under the Federal Arbitration Act, if the parties have an arbitration
agreement and the asserted claims in a lawsuit are within its scope, a motion to
compel arbitration must be granted. 9 U.S.C. §§ 3-4; Sharif v. Wellness Int’l
Network, Ltd., 376 F.3d 720, 726 (7th Cir. 2004) (citing Kiefer Specialty Flooring,
Inc. v. Tarkett, Inc., 174 F.3d 907, 909 (7th Cir. 1999)). The Act “establishes that, as
a matter of federal law, any doubts concerning the scope of arbitrable issues should
be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24-25 (1983). Accordingly, Section 3 of the Act requires granting a
motion to stay a lawsuit where “the issue involved in such suit ... is referable to
arbitration” under a written agreement. 9 U.S.C. § 3. And Section 4 requires that
the court order the parties to proceed in arbitration if there is an agreement to
arbitrate. 9 U.S.C. § 4.
“Although it is often said that there is a federal policy in favor of arbitration,
federal law places arbitration clauses on equal footing with other contracts, not
above them.” Janiga v. Questar Capital Corp., 615 F.3d 735, 740 (7th Cir. 2010)
(citing Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68 (2010)). “Any
‘preference’ for arbitration is reserved for the interpretation of the scope of a valid
arbitration clause.” Id. at 740 (citing AT & T Techs., Inc. v. Communications

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Workers of Am., 475 U.S. 643, 649-50 (1986)). Before staying judicial proceedings
and compelling arbitration, it is generally for the court to decide whether a contract
containing an arbitration clause exists at all. See Granite Rock Co. v. Int’l
Brotherhood of Teamsters, 561 U.S. 287, 296 (2010). Whether a binding arbitration
agreement exists is determined under principles of state contract law. Janiga, 615
F.3d at 742 (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 934
(1995)).
III. Analysis
Joseph Testa does not dispute that his father Samuel’s personal-injury claim
falls within the scope of the Arbitration Agreement that Joseph signed on Samuel’s
behalf. Instead, Joseph offers three theories for why the Agreement was invalid to
start with: lack of consideration, lack of mutual assent, and because Joseph never
had the authority to bind Samuel to arbitration under the POAs. The first two of
these arguments are meritless under Illinois law. As for the third, concerning the
scope of Joseph’s authority, the Court must reserve judgment pending further
briefing from the parties.
A. Consideration for Arbitration Agreement
Under Illinois law, “[w]here there is no other consideration for a contract, the
mutual promises of the parties” is ordinarily sufficient to “constitute the
consideration.” Carter v. SSC Odin Operating Co., 976 N.E.2d 344, 351 (Ill. 2012)
(quoting Armstrong Paint & Varnish Works v. Continental Can Co., 133 N.E. 711,
714 (Ill. 1921)); accord Bishop v. We Care Hair Dev. Corp., 738 N.E.2d 610, 623 (Ill.

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App. Ct. 2000). Notwithstanding this principle, Joseph contends that the
Arbitration Agreement should not be given effect because the company’s end of the
bargain was, according to Joseph, illusory: specifically, the exception the Agreement
makes for “matters involving evictions” is a “loophole that allows [Emeritus] to
avoid arbitration for virtually all claims … rendering its ‘promise’ to arbitrate
meaningless.” Pl.’s Resp. Br. at 8-9. Joseph points to the Establishment Contract,
which outlines several grounds for which Emeritus could properly terminate
Samuel’s residence at its facility, including non-payment of fees, failure to comply
with other contractual terms, and Emeritus’s reasonable belief that its facility is
inappropriate for him. Establishment Contract at 11-12. Because the Establishment
Contract gives Emeritus such broad grounds to terminate its relationship with
Samuel, the argument goes, an exception for eviction disputes in the arbitration
agreement is “more expansive than it appears,” in effect allowing Emeritus to evade
arbitration nearly at will by invoking “destruction of property, unpaid rent, and
countless other claims … seemingly unrelated to eviction.” Pl.’s Resp. Br. at 10
(arguing that Samuel, by contrast, cannot institute eviction proceedings as the
tenant and has “waived his right to litigation”).
The eviction carve-out is not the rule-swallowing exception that Joseph
portrays. Although it is true that a range of grievances could, in theory, underlie an
eviction action, it hardly follows that the exception is therefore an end-around that
renders the entire arbitration-promise illusory on Emeritus’s part. Joseph cites to
Vassilkovska v. Woodfield Nissan, Inc., 830 N.E.2d 619 (Ill. App. Ct. 2005), but that

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case actually illustrates the counterpoint to Joseph’s argument. In that case, the
court held that an independent arbitration agreement between a car dealer and a
buyer lacked consideration because it included so many exceptions that it “[left] no
claim that [the dealer] would be required to submit to arbitration.” Id. at 625. The
agreement excepted a broad swath of claims from arbitration, including actions
based on: the buyer’s failure to pay amounts due under the purchase contract, the
buyer’s bad check, the buyer’s failure to provide good title to a trade-in vehicle or
the buyer’s misrepresentation of any loans on the vehicle, a claim for replevin or
repossession, and enforcement of a separate retail installment contract. Id. at 621,
626. In effect, the buyer waived his rights to sue for every foreseeable cause of
action related to the purchase of a car, while the seller retained “the right to sue the
plaintiff for a laundry list of reasons.” Id. at 626. But that type of lack of mutuality
does not define the Emeritus-Testa agreement at issue here. Any number of
conceivable claims, based on contract or tort law, statutory or common law, could
have arisen from Samuel’s stay at the assisted-living facility that do not necessarily
involve eviction proceedings, making them fully subject to arbitration as against
both parties—including, notably, personal injury and negligence claims like the ones
raised in this lawsuit. Thus, in contrast to the arbitration agreement in
Vassilkovska, which was seemingly designed to hamstring the buyer in all disputes
that might plausibly arise with the seller, the exception to the parties’ promise to
arbitrate here was truly limited and the arbitration-duty more or less reciprocal in
effect.

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Joseph’s efforts to suggest otherwise by painting the eviction-clause as some
sort of Trojan Horse is unfounded. The fact that only Emeritus as landlord could
initiate an eviction action does not in itself constitute an imbalance invalidating the
entire Arbitration Agreement. See Gen. Motors Acceptance Corp. v. Johnson, N.E.2d
30, 37 (Ill. App. Ct. 2004) (“While consideration is essential to the validity of a
contract, mutuality of obligation is not.”) (quoting Vassilkovska, 814 N.E.2d at 89293). Joseph suggests instead, in essence, that the Agreement was tainted because
Emeritus could have manipulated any dispute into the shape of an eviction
proceeding in order to avoid arbitration. Needless to say, not only does this
argument ignore the universe of potential claims that could have arisen (both in
Samuel’s favor and against) independently of any eviction, it amounts to nothing
more than speculation as to how Emeritus might invoke the eviction clause.
Accordingly, the attack on the eviction-exception as rendering Emeritus’ promise
illusory is groundless, and “proper consideration was given by way of the parties’
mutual commitment to the unilateral election of arbitration.” Id. at 38.
B. Mutual Assent to Arbitration Agreement
Joseph also asserts that the Arbitration Agreement lacked mutual assent
because Emeritus never signed the document. Pl.’s Resp. Br. at 10-11. Emeritus
concedes that it did not sign the Agreement, but counters that the lack of a
signature is not dispositive on the question of assent in its case. Def.’s Reply Br. at
10-11. Emeritus is correct.

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In Illinois, “a signature is not always essential to the binding force of an
agreement. The object of a signature is to show mutuality or assent, but these facts
may be shown in other ways, as, for example, by acts or conduct of the parties.”
Lynge v. Kunstmann, 418 N.E.2d 1140, 1144 (Ill. App. Ct. 1981) (citations omitted);
see also Hedlund & Hanley, LLC v. Bd. of Trustees of Cmty. Coll. Dist. No. 508, 876
N.E.2d 1, 6 (Ill. App. Ct. 2007). Only where signatures are an expressly-required
condition-precedent of an agreement will their absence render the contract voidable.
Lynge, 418 N.E.2d at 1144 (citing S. N. Nielsen Co. v. Nat’l Heat & Power Co., 337
N.E.2d 387, 391 (Ill. App. Ct. 1975)).
Applying this state-law standard, the federal district court in McMahan v.
Rizza Chevrolet, Inc., 2006 WL 2560883 (N.D. Ill. Aug. 31, 2006), considered facts
very similar to those at issue here. Even though the defendant car-dealer had not
signed the arbitration agreement in that case (unlike the underlying purchase
contract, which both parties signed), the court held that the defendant’s actions in
producing the agreement in the first place and then attaching it to the purchase
contract indicated its assent to be bound. Id. at *2. Likewise here, it was Emeritus
who produced the Arbitration Agreement for Joseph’s consideration and the
company retained the document once Joseph had signed it. There was no language
in the Agreement, moreover, that made both parties’ signatures a requirement for
full execution. Accordingly, there can be little doubt that Emeritus intended to be
bound by the terms of the Agreement.

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The only case Joseph cites to support his position, Carlton at the Lake, Inc. v.
Barber, 928 N.E.2d 1266 (Ill. App. Ct. 2010), is distinguishable. In Barber, a
nursing home tendered a written contract to a resident’s daughter and attorney-infact, which neither the daughter nor the nursing home ever signed. Id. at 1269. The
nursing home sought to bind the resident, arguing that the daughter had accepted
the contract’s terms by later placing her father into the nursing home and signing
various other admission forms. Id. at 1270. The court held that the parties had not
formed a valid contract because the Nursing Home Care Act, 210 ILCS 45/1-101 et
seq., requires any contract between a nursing home and its resident to be signed by
the nursing home’s agent. See Barber, 928 N.E.2d at 1271 (citing Department of
Public Health administrative rules governing contracts between residents and care
facilities, 77 Ill. Admin. Code § 300.630). Importantly, assisted living facilities like
Emeritus are not subject to the administrative rules the court relied on in Barber.
See 77 Ill. Admin. Code § 300.330 (excluding “assisted living” facilities from the
definition of “facility or long-term care facility”). Since there was no statutory
requirement that Emeritus sign the Arbitration Agreement, ordinary Illinois
standards for establishing assent, which do not always require a signature, apply.
As Emeritus produced the Agreement in question and sought its execution, there
was mutual assent to support its validity.
C. Joseph’s Authority to Bind Samuel to Arbitration
Although there was adequate consideration and mutual assent to support the
Arbitration Agreement, Emeritus’s motion to compel arbitration stalls, at least for

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the time being, on the issue of the scope of Joseph’s authority to bind his father to
the Agreement in the first place. Emeritus relies on both the Illinois and Arizona
POAs to assert that Joseph had the appropriate authority, so it is necessary to
examine principles of agency law under both Illinois and Arizona law. See Illinois
POA (invoking Illinois Power of Attorney Act, 755 ILCS 45/4-1 et seq.); Arizona POA
at 4 (“This instrument shall be governed by the laws of the State of Arizona in all
respects[.]”). Right now, because no material facts are disputed (at least the parties
have not identified any), the Court can decide the issue as a matter of law. See
Goodman v. Physical Resource Engineering, Inc., 270 P.3d 852, 857 (Az. Ct. App.
2011); Daniels v. Corrigan, 866 N.E.2d 1193, 1204 (Ill. App. Ct. 2008).
An agent’s authority to act in the principal’s stead can be either actual or
apparent in nature. See Patrick Engineering, Inc. v. Naperville, 976 N.E.2d 318, 329
(Ill. 2012); Ruesga v. Kindred Nursing Centers, LLC, 161 P.3d 1253, 1261 (Az. Ct.
App. 2007). Actual authority in turn may be either express or implied: express
authority is granted by the principal explicitly “in very specific or detailed
language”; implied authority exists when an agent acts according to the principal’s
perceived wishes “based on the agent’s reasonable interpretation of the principal’s
manifestation in light of the principal’s objective and other facts known to the
agent.” Restatement (Third) of Agency § 2.01 cmt. b (2006). Apparent authority,
meanwhile, is found “where a principal has created the appearance of authority in
an agent, and another party has reasonably and detrimentally relied upon the
agent’s authority.” Patrick, 976 N.E.2d at 329-30 (citing Petrovich v. Share Health

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Plan of Illinois, Inc., 719 N.E.2d 756, 765 (Ill. 1999)); Curran v. Indus. Comm’n of
Arizona, 752 P.2d 523, 526 (Az. Ct. App. 1988) (The apparent, or ostensible, agent is
“one where the principal has intentionally or inadvertently induced third persons to
believe that such a person was its agent although no actual or express authority
was conferred on him as agent.”) (quoting Gulf Ins. Co. v. Grisham, 613 P.2d 283,
286 (Az. 1980)). The party alleging an agency relationship must prove it by a
preponderance of the evidence. See Granite Properties Ltd. Partnership v. Granite
Inv. Co., 581 N.E.2d 90, 92 (Ill. App. Ct. 1991); Curran, 752 P.2d at 526.
Emeritus argues that Joseph possessed each of these variants of authority
and that, in the alternative, the parties effectively ratified the Agreement anyway,
rendering the question of initial authority moot. As discussed later on in this
opinion, Emeritus’s contentions as to implied and apparent authority, as well as
ratification, are without merit. Because the parties have not addressed any Arizona
authority or two potentially outcome-determinative Illinois cases concerning the
question of express authority, however, supplemental briefing is required on that
issue alone.
1. Whether Joseph had Actual Express Authority Requires More Briefing
Emeritus argues in his reply brief that Joseph had actual, express authority
to bind Samuel to arbitration by the terms of the two POAs: in particular, the
language in Article 1 of the Arizona POA, concerning asset control, that grants
Joseph “full power and authority to do any and all acts for [Samuel’s] benefit,” and
the provisions in the Illinois POA giving Joseph power to make “personal care,

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medical treatment, hospitalization, and health care” decisions and enter into
related agreements. R. 12, Def.’s Reply Br. at 3-4 (quoting in part and summarizing
in part language from POAs). In his response brief, Joseph, anticipating this line of
argument, contends that such “catch all” provisions, including those in short-form
statutory powers of attorney, cannot grant “plenary powers” to bind a principal to
arbitration agreements without clear intent to do so. R. 10, Pl.’s Resp. Br. at 4-7.
The parties’ briefing is lacking in a couple of respects: first, neither addresses
Arizona authority at all, despite the fact that the Arizona POA explicitly declares
that Arizona’s law shall govern its scope; second, their discussion does not take into
account certain Illinois decisions that might well be dispositive. For now, the Court
engages in an initial analysis to guide the parties when they address these
shortcomings in supplemental submissions.
a. Cases Cited by Parties
To begin, in an effort to show that Joseph’s authority assumes in-court
litigation, and not arbitration, Joseph points out that the Arizona POA contains
language about his authority specifically in the context of legal proceedings. In
particular, the Arizona POS says that Joseph may: “appear for [Samuel] in all
actions and proceedings … in courts of Arizona or elsewhere, to commence actions
and proceedings in [Samuel’s] name and to sign and verify in [Samuel’s] name all
complaints, petitions, answers and other pleadings[.]” Id. at 6 (citing Arizona POA
at 2) (emphasis in Joseph’s brief). Joseph argues that, in addition to the absence of
any express mention of a right to enter into arbitration for his father, this

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provision’s specific reference to courts and court-filings “shows that Samuel
intended for his agent to represent his interests in litigation, and not to forfeit his
rights to a jury trial.” Id. Joseph then cites Fort Dearborn Life Ins. Co. v. Holcomb,
an Illinois case reiterating that, in the context of a power of attorney, “a catchall
provision will not expand a specifically limited power absent clear evidence of the
principal’s intent that it do so.” 736 N.E.2d 578, 586 (Ill. App. Ct. 2000) (quoting In
Re Guardianship of Mabry, 666 N.E.2d 16, 21 (Ill. App. Ct. 1996)). Joseph does not
specifically address the Illinois POA, but presumably he meant for his argument on
the inefficacy of “catch all” “plenary powers” provisions to apply to it as well.
The problem is that—in addition to the incongruity that Joseph relies only on
the Illinois decision to interpret the Arizona POA—Holcomb turned on the fact that
the power of attorney in question was deemed a specific statutory short form (for
property matters) that expressly prohibits an agent from taking the action at issue
in that case, namely, changing beneficiaries under insurance policies. See id. at 58788 (citing 755 ILCS 45/3-4). Even if Holcomb’s reasoning were applied to Joseph’s
Illinois POA, that document follows a separate statutory short form (for health law)
which, more importantly, contains no similar specific exception to the agent’s power
at stake here, binding a principal to arbitration. Thus, without more analysis,
Holcomb (which Emeritus ignores in its brief) is not necessarily the long and short
of it on short-form powers of attorney (or Arizona POAs).
Nor is Curto v. Illini Manors, Inc., 940 N.E.2d 229 (Ill. App. Ct. 2010), the
only case both parties discuss in detail on the issue. Curto invalidated an

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arbitration agreement signed by a wife on behalf of her husband, a nursing home
resident. Unlike in the Testas’ case, there was not even a generalized power of
attorney involved; the narrow question settled was whether, absent no other
evidence, the fact of marriage is enough to convey authority (the answer is no). Id.
at 233-34. The court did observe, but only in dictum, that “[e]ven where a health
care power of attorney [is] present,” courts (but not specifically courts in Illinois or
Arizona) have “held that a health care power of attorney granted for medical
decisions does not confer authority to sign an arbitration agreement waiving legal
rights.” Id. at 234 (collecting cases from Georgia, Colorado, Texas, Mississippi, and
Florida). In any event, Curto’s actual holding appears less relevant to this case than
some other cases left unmentioned by the parties, which this opinion now discusses.
b. Nichols and Fiala
Two Illinois cases, although not cited by either party (one because it was only
issued after the motion was fully briefed), merit attention. The first appears to more
clearly support the argument that catch-all provisions have limited effect. In Estate
of Nicholls v. Nicholls, a nephew acting under a power of attorney from his uncle
made himself the beneficiary of his uncle’s certificates of deposit. 960 N.E.2d 78, 7980 (Ill. App. Ct. 2011). The POA had enumerated certain banking powers, including
the power to “acquire and redeem certificates of deposit”; it had also included broad
language purporting to allow “all such actions which [the principal] could do if
personally present,” while clarifying that any specifically enumerated powers were
not meant to “limit or restrict the general durable powers” of the nephew. Id. at 81-

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82. The Illinois Appellate Court held that such “catch all” language could not make
up for the absence of an express provision allowing the nephew to change
beneficiaries, which the court found necessary even beyond the provision allowing
him to “acquire or redeem certificates of deposit.” Id. at 83.
Nichols relied in part on commentary in the Restatement (Second) of Agency,
which looks unfavorably on broad generic grants of authority to agents. One
comment states, “[W]here general terms are used which literally purport to grant
great authority, such terms will normally be interpreted as authorizing the agent to
act only in connection with the business the agent is employed to perform. The more
specific the enumeration of acts to be done, the smaller the area to be included in
the general statement.” Restatement (Second) of Agency § 37 cmt. a (1958). Another
reads, “All-embracing expressions are discounted[,] discarded[, or] disregarded as
meaningless verbiage.” Id. § 34 cmt. h (1958) (giving example of phrase like “hereby
ratifying and confirming whatever our agent shall do”). Other courts have similarly
looked to these comments and the sections they describe as persuasive authority.
See Amcore Bank, N.A. v. Hahnaman-Albrecht, Inc., 759 N.E.2d 174, 182 (Ill. App.
Ct. 2001) (“[A] general grant of agency does not carry with it the power to execute
guaranties.”); Holcomb, 736 N.E.2d at 589; Ping v. Beverly Enters., 376 S.W.3d 581,
591-93 (Ky. 2012) (no actual authority to enter arbitration agreement with nursing
home on mother’s behalf).
The second case, decided after the parties submitted their briefs, involved a
situation where an agent can bind his principal to arbitration on the basis of a

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broadly-worded, non-arbitration-specific grant of authority. Fiala v. Bickford Senior
Living Grp. 32 N.E.3d 80 (Ill. App. Ct. 2015), considered whether an agent acting
pursuant to the Illinois Powers of Attorney for Health Care Law could sign a
binding arbitration clause in a contract for assisted living services. The power of
attorney stated that “[t]he agent may sign and deliver all instruments, negotiate
and enter into all agreements and do all other acts reasonably necessary to
implement the exercise of the powers granted to the agent.” Id. at 89. Because the
arbitration provision was neither optional nor freestanding, but an integral part of
the patient’s underlying admission to the assisted living facility, the court held that
it fell within the scope of the agent’s authority to make health-care decisions. See id.
at 92 (“[I]f an arbitration provision is required for admission to a care facility then it
becomes part and parcel of the health-care decision to admit the patient to the
facility.”). Courts in other jurisdictions have embraced this principle, and its
corollary that the “decision to sign a free-standing arbitration agreement is not a
health care decision”—and thus outside the scope of a generic grant of authority
over health care decisions—“if the patient may receive health care without signing
the arbitration agreement.” Dickerson v. Longoria, 995 A.2d 721, 739 (Md. 2010);
see also, e.g., Life Care Centers of Am. v. Smith, 681 S.E.2d 182, 185 (Ga. Ct. App.
2009); Koricic v. Beverley Enterprises–Nebraska, Inc., 773 N.W.2d 145, 151 (Neb.
2009); but see Owens v. Nat’l Health Corp., 263 S.W.3d 876, 885 (Tenn. 2007)
(dismissing attempt to draw line between agent’s health care decisions and legal

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decisions on behalf of principal to find agent was authorized to sign nursing-home
contract, including arbitration provision).
c. Directions for Additional Briefing
The takeaway from this lengthy discussion is that the parties have not
analyzed the issue of actual authority enough to allow for a decision on the issue.3
First, the parties have not briefed at all Arizona authority, despite the fact that the
Arizona POA explicitly is governed by that State’s law. Reflective of, or perhaps as a
result of, that failure, the parties have not made any real attempt to separate out
the effects of the Illinois and Arizona POAs as the purported source of Joseph’s
authority as attorney, even though they arguably have distinctive terms and are
subject to separate legal analyses—in particular, the fact that the Illinois POA is a
statutory short form may raise issues not applicable to the Arizona POA. See, e.g.,
Holcomb, 736 N.E.2d at 587-88. Second, the Illinois decisions in Nichols and Fiala
do appear to provide guidance relevant to the motion. Where that guidance leads is
still up for the parties to argue, based on their interpretations of the facts about the
particular POAs here and their fit, if any, with the standards articulated by Nichols
and Fiala. The parties are directed to address these issues (and these issues alone)
in supplemental briefing to be filed according to the schedule set at the end of this
opinion.

3Part

of the incompleteness of the briefing stems from the fact that Emeritus first
made its arguments about the efficacy of Joseph’s power of attorney in Emeritus’s reply
brief. For his part, in his response brief, Joseph anticipated that Emeritus would rely on the
Arizona POA, but there was no discussion of the Illinois POA. The additional briefing
ordered by the Court should enable Emeritus to lay out its case for establishing the agency
relationship between the Testas in full, and Joseph to respond in kind.

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2. Joseph Did Not Have Implied or Apparent Authority
In contrast to the question of actual authority, the argument that Emeritus
could rely on Joseph’s implied or apparent authority to sign the Arbitration
Agreement can be definitively ruled out. Emeritus contends that Joseph gave the
reasonable impression that he had such authority because the Agreement listed
him as Samuel’s legal representative, he had signed the Establishment Contract for
Samuel, paid Samuel’s fees for Emeritus’s services, and otherwise “managed his
father’s legal, medical, and financial affairs.” Def.’s Reply Br. at 5. In its one total
paragraph of argument on these two issues, Emeritus blends the two distinct
concepts of implied (which is a variant of actual) authority and apparent authority
(which is a concept separate from any form of actual authority), and fails to
demonstrate that either agency relationship existed between the Testas.
Implied authority “arises when the conduct of the principal, reasonably
interpreted, causes the agent to believe that the principal desires him to act on the
principal’s behalf.” Curto, 940 N.E.2d at 233 (citing Restatement (Second) of Agency
§ 26 (1958)). 4 In other words, it is concerned with the impression of a grant of
specific power created by the principal in the mind of the agent; it is not enough to
simply look at the objective actions of the agent after or during the fact. Emeritus
offers nothing but the conclusory and unsupported gloss that Samuel “had” Joseph

4Unlike

in the context of interpreting the possible express grant of authority in the
POAs, which necessitates looking at Arizona law, the Court assumes, as the parties do, that
only Illinois law governs whether Joseph had implied or apparent authority. This
assumption rests on the fact that implied authority and apparent authority, rather than
drawn from a document like the Arizona POA, are determined based on the behavior of the
principal and other circumstances.

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sign the Agreement, Def.’s Reply Br. at 5, which is hardly the same as a factual
basis to argue that Samuel had inferentially created the impression that he wanted
his son to specifically bind him to arbitration. 5 See Curto, 940 N.E.2d at 233
(implied authority requires “circumstances” like a “prior course of dealing of a
similar nature between the alleged agent and principal or from a previous agency
relationship”) (citing Hartshorn v. State Farm Insurance Co., 838 N.E.2d 211 (Ill.
App. Ct. 2005)).
Emeritus’s argument about apparent authority fails for much the same
reason. Apparent authority asks what “a reasonably prudent person, exercising
diligence and discretion, in view of the principal’s conduct, would naturally suppose
the agent to possess.” Patrick Engineering, 976 N.E.2d at 318. Importantly, “[o]nly
the alleged principal’s words and conduct, not those of the alleged agent, establish
the agent’s authority.” Amcore, 759 N.E.2d at 183. Again, Emeritus points only to
conclusory allegations of Joseph’s actions (he paid, he managed, he signed) to
suggest the existence of authority; but labeling the very act that is sought to be
validated as de facto proof of the power to carry it out is circular, to say nothing of
the question of Emeritus’s own (lack of) “diligence and discretion” in clarifying
Joseph’s authority. See Alterman v. Lydick, 241 F.2d 50 (7th Cir. 1957) (truck driver
had apparent authority to sign lease because he was “clothed by” the principal in
outward, objective “indicia of authority” like possession of truck and principal’s

5Emeritus’s

cursory argument that Samuel should be estopped from claiming Joseph
lacked authority to execute the Arbitration Agreement on the basis of the same conclusion
that the father “had” the son sign it, Def.’s Reply Br. at 7, is similarly underdeveloped and
meritless.

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registration documents, and such delegation was customary practice). Accordingly,
Emeritus’s contention that Joseph had implied or apparent authority to sign the
Arbitration Agreement is rejected.
3. Samuel did not Ratify the Arbitration Agreement
Finally, the Court can also outright reject Emeritus’s argument that, even if
Joseph lacked authority to sign the Arbitration Agreement, Samuel ratified it.
“Ratification occurs when the principal learns of an unauthorized transaction, then
retains the benefits of the transaction or takes a position inconsistent with
nonaffirmation.” Stathis v. Geldermann, Inc., 692 N.E.2d 798, 808 (Ill. App. Ct.
1998) (citation omitted). Emeritus asserts that Samuel’s continuing to reside at
Emeritus, as well as paying for and receiving services there, for over a year after
the Arbitration Agreement was signed constituted a “classic example of
ratification.” R. 12, Def.’s Reply Br. at 7.
Emeritus conflates a purported ratification of the Arbitration Agreement
with the unrelated performance of the underlying Establishment Contract. The two
documents, remember, were drawn up and executed independently of each other,
the former signed three weeks after the latter and Samuel’s arrival at Emeritus.
Nor was the Arbitration Agreement a necessary condition of the Establishment
Contract: according to the Arbitration Agreement’s own terms, “Admission to the
Community [was] not contingent on signing [the] Agreement.” Arbitration
Agreement at 2 (emphasis added). Thus, that Samuel continued to reside at
Emeritus according to independently agreed-to terms says nothing about what he

22

thought about the separate promise to arbitrate (which had no bearing on whether
Samuel got to remain in the facility or on the services and benefits he would
receive), nor does it evince “a position inconsistent with nonaffirmation” in any way.
See All American Roofing, Inc. v. Zurich American Ins. Co., 934 N.E.2d 679, 696-97
(Ill. App. Ct. 2010) (employer’s acceptance of insurance coverage under different
contracts did not signify acceptance of separate program agreements bearing
arbitration clauses). The cases relied on by Emeritus are readily distinguishable,
dealing with single agreements that the principals were found to have adopted. See
Stathis v. Geldermann, Inc., 692 N.E.2d 798, 808 (Ill. App. Ct. 1998); McCracken v.
Olson Companies, Inc., 500 N.E.2d. 487, 493 (Ill. App. Ct. 1986). Accordingly,
Emeritus cannot compel arbitration on the grounds that Samuel ratified the
Arbitration Agreement.
IV. Conclusion
For the reasons discussed above, certain arguments are rejected: Joseph
Testa’s contentions that the Arbitration Agreement lacked consideration and
mutual assent; and Emeritus’s arguments that the Agreement was based on
Joseph’s implied or apparent authority as Samuel’s agent, and that Samuel ratified
the Agreement. But Emeritus’s motion to compel arbitration is entered and
continued, pending additional briefing. The parties must submit additional briefing
on the issue of Joseph’s actual, express authority to bind Samuel to arbitration on
the basis of the Illinois and Arizona powers of attorney. Emeritus shall submit its
brief, addressing this issue only, by September 18, 2015. Joseph Testa shall respond

23

by October 2, 2015. Emeritus may file a reply no later than October 9, 2015. The
status hearing of September 18, 2015, is reset to October 22, 2015, at 9:30 a.m.

ENTERED:

s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: September 4, 2015

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