FROM THE OUACHITA COUNTY CIRCUIT COURT. NO. CV-2011-121-6.
HONORABLE DAVID F. GUTHRIE, JUDGE.
Jesson & Terry, PLC, by: Kirkman T. Dougherty, Jeffrey W.
Hatfield, and Kynda Almefty; Dechert, LLP; by: H. Joseph
Escher III; Eugene D. Bramblett; and Shook, Hardy &
Bacon, LLP, by: A. Bradley Bodamer, for appellants.
Law Firm, P.A., by: H. Gregory Campbell; Ludwig Law Firm,
PLC, by: Gene A. Ludwig; Reddick Moss, PLLC; by: Brian D.
Reddick and Matthew D. Swindle; and Marks, Balette &
Giessel, P.C., by: David Marks, for appellees.
R. BAKER, Associate Justice. DANIELSON and WYNNE, JJ.,
R. BAKER, Associate Justice
appeal returns from our remand in GGNSC Holdings, LLC v.
Chappel, 2014 Ark. 545, 453 S.W.3d 645. The appeal arose
from the January 30, 2014 Ouachita County Circuit Court's
denial of GGNSC's motion to compel arbitration of five
former residents. At the time of their admission, arbitration
agreements were entered by or on behalf of the following five
residents: Nellie Lamb, Louise Brown, Wilma Richey, Leon
Robinson, Jr., and Thomas Roche. The arbitration agreements
contained the following provisions:
It is understood and agreed by Facility and Resident that any
and all claims, disputes, and controversies (hereafter
collectively referred to as a " claim" or
collectively as " claims" ) arising out of, or in
connection with, or relating in any way to the Admission
Agreement or any service or health care provided by the
Facility to the Resident shall be resolved exclusively by
binding arbitration to be conducted at a place agreed upon by
the Parties, or in the absence of such an agreement, at the
Facility, in accordance with the National Arbitration Forum
Code of Procedure, (" NAF" ) which is hereby
incorporated into this Agreement, and not by a lawsuit or
resort to court process. This agreement shall be governed by
and interpreted under the Federal Arbitration Act, 9 U.S.C.
. . . .
In the event a court having jurisdiction finds any portion of
this agreement unenforceable, that portion shall not be
effective and the remainder of the agreement shall remain
. . . .
THE PARTIES UNDERSTAND AND AGREE THAT THIS CONTRACT CONTAINS
A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES, AND THAT BY ENTERING INTO THIS ARBITRATION
AGREEMENT, THE PARTIES ARE GIVING UP AND WAIVING THEIR
CONSTITUTIONAL RIGHT TO HAVE ANY CLAIM DECIDED IN A COURT OF
LAW BEFORE A JUDGE AND A JURY, AS WELL AS ANY APPEAL FROM A
DECISION OR AWARD OF DAMAGES.
December 19, 2011, the appellees, who are former residents of
the nursing homes, special administrators, guardians, or
attorneys-in-fact of former residents (for purposes of this
appeal, the appellees will be collectively referred to as
" Lamb" ) filed a class-action complaint against
appellants GGNSC Holdings, LLC, and other related entities
and employees of GGNSC Holdings, LLC (collectively "
GGNSC" ). In February 2012, GGNSC moved to compel
arbitration of claims asserted by Lamb, Brown, Richey,
Robinson, and Roche. On January 30, 2014, the circuit court
denied the motions to compel arbitration.
Chappel, we reversed and remanded the Ouachita
County Circuit Court's January 30, 2014 order denying
GGNSC's motion to compel arbitration because the circuit
court addressed the impossibility-of-performance defense
without first making the threshold finding of whether the
arbitration agreements were valid. Id. at 8, 453
S.W.3d at 649. Specifically, we explained:
Considering the instant case in light of our most recent
precedent, it is clearly more akin to the situation presented
in Bank of the Ozarks than that presented in
Asset Acceptance. Here, we simply do not have a
blanket denial of the motion to compel. The order that is the
subject of this appeal specifically addresses an issue
involving impossibility of performance, a defense to a
contract. After an in-depth discussion on that issue, the
circuit court included a catch-all sentence that read, "
The other arguments of Plaintiffs' counsel against the
motion to compel arbitration are persuasive and contribute to
this decision." Those other arguments raised by
appellees were that there was no mutual assent because of a
lack of authority on the part of those who signed the
arbitration agreement and that the agreement was
[FN4] Appellees do not assert that there was a
lack of authority with regard to Mr. Robinson.
Clearly, appellees challenged the validity of the
arbitration agreement itself and, thus, it was incumbent on
the circuit court to address this threshold issue. We cannot
construe the court's catch-all sentence to be a ruling on
the issue of whether there was a valid agreement to
arbitrate. The circuit court stated that appellees' other
arguments contributed to its decision to deny the motions to
compel. But, it would be illogical for this court to conclude
that appellees' argument that there was no valid
agreement to arbitrate contributed to the denial of the
motions because there would have been no need for the court
to consider the impossibility defenses. In other words, if we
were to assume anything about the circuit court's ruling,
we would have to assume that the court impliedly found that
there was a valid agreement to arbitrate and then considered
the contract defense. But, we are not allowed to presume any
such ruling pursuant to our precedent in Bank of the
Ozarks. Accordingly, we reverse and remand this matter
to the circuit court.
2014 Ark. 545, at 7-8 & n.4, 453 S.W.3d at 649 & n.4.
March 3, 2015, Lamb filed a motion to enter a proposed order
and brief in support to enter proposed order. Lamb argued
that four of the five arbitration agreements are invalid
because the agreements lack the required element of mutual
assent. Specifically, Lamb contended that the agreements of
Lamb, Brown, Richey, and Roche were signed by persons who
were not authorized to sign on behalf of the resident. Lamb
argued that Robinson's agreement appears to be valid
because he signed the agreement himself; however,
Robinson's agreement is unenforceable because it is
impossible to perform and unconscionable. Further, Lamb
argued that even if the arbitration agreement is valid, the
motion to compel must be denied because in the event that the
National Arbitration Forum (" NAF" ) cannot conduct
the arbitration, or the NAF Code of Procedure cannot be
utilized, Lamb is entitled to pursue her claims in court
pursuant to NAF Rules 48(D) and (E).
March 19, 2015, GGNSC filed its response to Lamb's motion
to enter proposed
order and argued that Lamb's arbitration agreement is
valid because it was signed by her legal guardian. Brown,
Richey, and Roche's arbitration agreements are also valid
because the agreements were signed by agents acting with
apparent authority. Robinson's arbitration agreement is
valid because he signed the agreement himself. Further, the
agreements are not unconscionable, and performance of the
agreements is not impossible. Finally, NAF Rule 48 does not
grant Lamb the right to litigate the dispute in court.
9, 2015, the circuit court entered an amended order denying
arbitration. The circuit court found that three of the five
arbitration agreements were invalid because the agreements
were signed by individuals who lacked authority to agree to
arbitrate. The circuit court concluded that
Lamb's arbitration agreement is valid because Richard
Williams, as guardian of the person and estate of Lamb, had
the authority to bind Lamb to the arbitration agreement. The
circuit court also found that Robinson's arbitration
agreement was valid because he signed the agreement on his
own behalf. However, the circuit court ruled that Lamb and
Robinson's agreements were not enforceable to compel
arbitration based on the defenses of impossibility of
performance and unconscionability.
30, 2015, GGNSC filed its notice of appeal. On July 6, Lamb
filed a notice of cross-appeal. On appeal, GGNSC argues that
the circuit court committed reversible error by refusing to
enforce the valid arbitration agreements based on the
defenses of impossibility of performance and
unconscionability. On cross-appeal, Lamb argues that the
circuit court erred in determining that Richard Williams, the
court appointed guardian of the person and the estate of
Lamb, was authorized to waive Lamb's fundamental right to
a jury trial by executing an optional arbitration agreement
on Lamb's behalf. Because Lamb's cross-appeal
involves the threshold issue of the validity of the
arbitration agreement, we must first consider Lamb's
this is a subsequent appeal to this court, this court's
jurisdiction is proper pursuant to Arkansas Supreme Court
Rule 1-2(a)(7)(2015). Our jurisdiction is also in accordance
with Rule 2(a)(12) of the Arkansas Rules of Appellate
Procedure--Civil, which permits interlocutory appeals from
orders denying motions to compel arbitration. We review a
circuit court's order denying a motion to compel
arbitration de novo on the record. Searcy Healthcare
Ctr., LLC v. Murphy, 2013 Ark. 463, at 3 (citing
HPD, LLC v. Tetra Techs., Inc., 2012 Ark. 408, 424
Authority of Williams
cross-appeal, Lamb argues that the circuit court erred in its
determination that Richard Williams, Lamb's son, had the
authority to bind Lamb to the arbitration agreement.
Specifically, Lamb argues that Arkansas law limits a
guardian's authority to acts necessary to promote and
protect the well-being of the person and his or her property;
a guardian of the person does not have the authority to bind
a ward to an arbitration agreement; and the authority of a
guardian of the estate is
limited to actions necessary to protect, preserve, and
administer the ward's property.
reviewing an arbitration agreement, despite the provision
being subject to the Federal Arbitration Act ("
FAA" ), courts look to state contract law to determine
whether the parties' agreement to arbitrate is valid.
Chappel, 2014 Ark. 545, 453 S.W.3d 645. The same
rules of construction and interpretation apply to arbitration
clauses as apply to agreements generally. Hart v.
McChristian, 344 Ark. 656, 42 S.W.3d 552 (2001). The
construction and legal effect of a written contract to
arbitrate are to be determined by the court as a matter of
law. Id. Accordingly, we will give effect to the
parties' intent as evidenced by the arbitration agreement
itself. Id. In light of the policy favoring
arbitration, such agreements will not be construed strictly
but will be read to include subjects within the spirit of the
parties' agreement. Id.
our review of the arbitration agreement at issue, in HPD,
LLC v. TETRA Techs., Inc., we explained,
In deciding whether to grant a motion to compel arbitration,
two threshold questions must be answered. First, is there a
valid agreement to arbitrate between the parties? Second, if
such an agreement exists, does the dispute fall within its
scope? In answering these questions, doubts about
arbitrability must be resolved in favor of arbitration.
Further, the court (rather than the arbitrator) decides these
questions of arbitrability, unless the parties clearly and
unmistakably delegate that issue to the arbitrator. Based on
the principle that arbitration is a matter of ...