Rankin v. Brinton Woods of Frankfort, LLC

          Argued: April 9, 2018

          Circuit Court for Baltimore City Case No. 24-C-16-005938

          Meredith, Leahy, Sharer, J. Frederick (Senior Judge, Specially Assigned), JJ.

          OPINION

          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 (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.se was

         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 (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.

         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 ...