LAUREL CREEK HEALTH CARE CENTER VS. BISHOP (COLSON)
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RENDERED: MARCH 19, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001055-MR
LAUREL CREEK HEALTH CARE
CENTER
v.
APPELLANT
APPEAL FROM CLAY CIRCUIT COURT
HONORABLE OSCAR G. HOUSE, JUDGE
ACTION NO. 06-CI-00037
COLSON BISHOP, AS PERSONAL
REPRESENTATIVE FOR THE ESTATE
OF GILBERT BISHOP
APPELLEE
OPINION
REVERSING AND REMANDING
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BEFORE: DIXON, LAMBERT, AND WINE, JUDGES.
LAMBERT, JUDGE: Laurel Creek Health Care Center appeals from the Clay
Circuit Court’s denial of its motion to compel arbitration. After careful review, we
reverse and remand.
Gilbert Bishop was admitted to Laurel Creek Health Care Center on
July 23, 2002, after arriving via ambulance without family present. Gilbert was
transferred from home and upon admission was suffering from various physical
ailments which rendered him unable to perform daily tasks such as bathing and
dressing. Upon his arrival, Laurel Creek placed Gilbert in a room and conducted a
Mini-Mental State Examination. During that examination, Gilbert communicated
to Laurel Creek staff that he could not use his hands well enough to write or hold a
pencil. Gilbert was otherwise found to be mentally competent.
Gilbert’s sister, Rachel Combs, arrived after Gilbert had been placed
in a room. In her deposition, Rachel testified that when she arrived at the facility
she offered to sign the admissions forms, but Laurel Creek employees told her that
it was their policy to have the patient’s spouse sign the admissions papers if the
patient was unable to sign them. Rachel also testified that Gilbert asked her to get
his wife, Anna Bishop, so that she could sign his admissions papers. Rachel left
and picked up Anna, who had been working earlier in the day. Upon arriving,
Rachel and Anna watched an admissions video, and Anna signed the admissions
paperwork, which contained a provision for mandatory arbitration. Anna also
signed other admissions documents, including advance directive information, a
consent to release medical information, a receipt for resident rights information,
and other documents required for Medicare and Medicaid compliance.
On May 2, 2004, Gilbert experienced an acute allergic reaction and
was transferred to Manchester Memorial Hospital, where he was treated and
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discharged back to Laurel Creek. Later that evening, Gilbert experienced difficulty
while eating, went into cardiopulmonary arrest, and was transported back to the
hospital where he died. Following Gilbert’s death, his brother, Colson Bishop,
qualified as a personal representative of his estate and brought this action for
negligence against Laurel Creek.
On April 6, 2006, Laurel Creek requested that the trial court hold the
matter in abeyance and order the parties to proceed to arbitration in accordance
with the mandatory arbitration provision contained in the admissions paperwork
signed by Gilbert’s wife. That motion was denied pending discovery. Laurel
Creek renewed its motion under KRS 17.050, et seq., to hold the matter in
abeyance and compel arbitration. The trial court denied the motion by order
entered May 27, 2009, making the following specific findings of fact:
1. Gilbert Bishop had the mental capacity to contract.
2. Gilbert Bishop did not sign the purported arbitration
agreement.
3. Gilbert Bishop’s wife, Anna Bishop, signed the
purported arbitration agreement.
4. No written document such as power of attorney or
other writing exists that gives Anna Bishop legal
authority to make decisions for Gilbert Bishop.
5. Gilbert Bishop’s words or actions did not give Anna
Bishop actual, apparent, or implied authority to sign the
purported arbitration agreement.
Laurel Creek now appeals, arguing that the trial court’s last finding of fact is not
supported by substantial evidence and is incorrect as a matter of law.
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Review of a trial court’s denial of an application for arbitration in a
KRS 417.060 proceeding is de novo as to questions of law, with findings of fact
reviewed on a clearly erroneous standard if not supported by substantial evidence.
Conseco Finance Servicing Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky. App. 2001).
Laurel Creek first argues that this is a case of actual agency and that
Anna Bishop had actual authority as Gilbert’s agent to sign the admissions
paperwork and is therefore bound by the arbitration agreement therein. In the
alternative, Laurel Creek argues that this is a case of apparent agency. Finally,
Laurel Creek argues that Gilbert’s estate is estopped from denying the existence of
an agency relationship.
A trial court may find actual agency if “there has been a manifestation
by the principal to the agent that the agent may act on his account, and consent by
the agent so to act.” Terbovitz v. Fiscal Court of Adair County, Ky., 825 F.2d 111,
116 (6th Cir. 1987) (overruled on other grounds) (internal citation omitted). See
also Restatement (Third) of Agency § 2.01 (2006). When an agent acts with actual
authority, the agent has the power to bind the principal or to “affect the principal’s
legal relations with third parties.” Id. at § 2.01.
We agree with Laurel Creek that Gilbert created an actual agency
relationship between him and his wife. According to his sister, Rachel, Gilbert
specifically asked that his wife be brought to the nursing home so that she could
sign the admissions documents for him, and Anna acted upon that delegation of
authority and signed the admissions papers. This is consistent with the creation of
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actual authority as described in the Restatement (Third) of Agency § 2.01,
comment c (2006). The Restatement explains the rationale for the creation of
actual agency in three steps. First, “the principal manifests assent to be affected by
the agent’s action.” In the instant case, Gilbert asked that Anna come to the
hospital to sign the papers for him. Second, “the agent’s actions establish the
agent’s consent to act on the principal’s behalf.” Here, Anna signed all the
admissions papers per her husband’s request and therefore consented to act on
Gilbert’s behalf. Third, by acting within such authority, the agent affects the
principal’s legal relations with third parties. Clearly here, Anna’s actions affected
Gilbert’s relations with Laurel Creek, a third party.
The trial court acknowledged that Gilbert had the mental capacity to
contract, and by implication, the ability to appoint his wife to act as his agent. The
fact that there was no written document, such as a power of attorney, does not
prevent Gilbert from making Anna his agent. See Moore v. Scott, 759 S.W.2d 827,
828 (Ky. App. 1988) (“[A] power of attorney is a form of agency.”) (internal
citation omitted). The record is unequivocal that Anna was brought to the facility,
by Gilbert’s request to his sister, for the expressed purpose of signing the
admissions documents on his behalf, without further definition, restriction, or
exception. It was a general delegation which Anna believed in good faith extended
to the admissions agreement.
In the alternative, if this is not a case of actual agency, it is a case of
apparent or implied agency. “Apparent authority is the power held by an agent or
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other actor to affect a principal's legal relations with third parties when a third
party reasonably believes the actor has authority to act on behalf of the principal
and that belief is traceable to the principal's manifestations.” Restatement (Third)
of Agency § 2.03 (2006). See also Mt. Holly Nursing Center v. Crowdus, 281
S.W.3d 809, 813 (Ky. App. 2008). Gilbert told his sister, Rachel, to get Anna so
that she could sign the admissions papers. Rachel testified in her deposition that
she tried to sign the papers for Gilbert, but that the staff told her that it was their
policy to have the patient’s spouse sign the paperwork and requested that Anna
sign the documents. Gilbert’s actions in directing Rachel to bring Anna was
communicated to Laurel Creek staff and they acted in reliance upon his expression
of authority, whether actual or implied. The record indicates, therefore, that there
was at the very least, an implied agency in this case.
A careful review of the record indicates that the trial court’s finding of
fact stating “Gilbert Bishop’s words or actions did not give Anna Bishop actual,
apparent, or implied authority to sign the purported arbitration agreement” is not
supported by substantial evidence. Instead, the evidence indicates that Gilbert
indicated to Laurel Creek that he was physically incapable of signing the
documents but was of sound mental capacity and wanted his wife to sign the
documents on his behalf. When Gilbert communicated this to his sister, and the
sister brought Anna in to sign the documents, Gilbert created an agency
relationship upon which Laurel Creek relied. The existence of an agency
relationship is supported by substantial evidence, specifically the direct testimony
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of Rachel Combs, and therefore the trial court’s ruling that no agency relationship
existed is incorrect as a matter of law. Having found that an agency relationship
existed, Laurel Creek’s third argument, that Gilbert’s estate is estopped from
denying the existence of an agency relationship, is moot.
Accordingly, we reverse the May 27, 2009, order of the Clay Circuit
Court and remand this matter for further proceedings consistent with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
A. Courtney Guild, Jr.
Edward L. Schoenbaechler
Louisville, Kentucky
David L. Helmers
Lexington, Kentucky
Eric K. Milles
Tallahassee, Florida
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