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Courtyard Gardens Health and Rehabilitation, Llc v. Sheffield

Supreme Court of Arkansas

June 2, 2016

COURTYARD GARDENS HEALTH AND REHABILITATION, LLC, ET AL., APPELLANTS
v.
PATRICIA ANN SHEFFIELD, AS SPECIAL ADMINISTRATOR OF THE ESTATE OF MAYLISSIA HOLLIMAN, DECEASED, APPELLEE

APPEAL FROM THE CLARK COUNTY CIRCUIT COURT NO. CV-2014-82 HONORABLE ROBERT MCCALLUM, JUDGE

Kutak Rock, LLP, by: Mark W. Dossett, Jeff Fletcher, and Margaret Benson, for appellant.

Appellate Solutions, PLLC, by: Deborah Truby Riordan; and Wilkes & McHugh, P.A., by: William P. Murray III, for appellee.

RHONDA K. WOOD, Associate Justice

Appellants, Courtyard Gardens Health and Rehabilitation, LLC and others ("collectively Courtyard"), appeal from a circuit court order denying their motion to dismiss and compel arbitration of the claims brought against them by appellee, Patricia Ann Sheffield, as special administrator of the estate of Maylissia Holliman, deceased. For reversal, Courtyard contends first that the circuit court erroneously ruled that Johnathan Mitchell, Holliman's emergency custodian, did not have authority to bind her to the arbitration agreement, and second, that the arbitration agreement is unenforceable because of the unavailability of the National Arbitration Forum ("NAF"). We affirm the court's ruling that the custodian did not have authority to execute the arbitration agreement. Because the agreement is invalid, we do not need to reach the second point.

In May 2010, following a complaint filed with adult protective services (APS), Johnathan Mitchell, a consultant with APS, went to Holliman's home to check on her.When he arrived, he found Holliman disoriented and unable to get out of bed. He also reported that Holliman was soaked in urine, that there was an inoperative gun in her bed, and that there was little food in the home. Because Mitchell thought that there was an imminent danger of serious bodily harm or death to Holliman if she remained at home alone, Mitchell sought emergency custody of Holliman.

The circuit court entered an ex parte order of emergency custody and set a probable cause hearing. The order authorized Arkansas Department of Human Services (DHS) to take Holliman into protective custody and to provide her "with physical, mental or emotional care as required in the opinion of a duly authorized or licensed physician, dentist, surgeon, or psychologist, whether or not such care is rendered on an emergency basis or on an inpatient or outpatient basis." In addition, the circuit court gave DHS access to Holliman's financial information "for the sole purpose of inspection of any financial information or assets."

Pursuant to the circuit court's order, Mitchell admitted Holliman to Courtyard. Mitchell, as Holliman's custodian, signed an admission agreement and an arbitration agreement on her behalf upon admission.

In August 2014, Sheffield, as special administrator of Holliman's estate, filed suit against Courtyard, alleging that Holliman had sustained injuries at Courtyard and that those injuries led to her death. Courtyard subsequently filed a joint motion to dismiss and compel arbitration. Following a hearing, the circuit court entered an order denying the motion. It concluded that Mitchell lacked authority under the ex parte order of emergency custody to bind Holliman to the arbitration agreement. It further found that the NAF Code of Procedure, which was incorporated into the arbitration agreement, was an integral term of arbitration and that because NAF was unavailable, the arbitration was impossible to perform.

In reviewing an arbitration agreement, courts look to state contract law to determine whether the parties' agreement to arbitrate is valid. GGNSC Holdings, LLC v. Lamb, 2016 Ark. 101');">2016 Ark. 101. The same rules of construction and interpretation apply to arbitration clauses as apply to agreements generally. Id. We are to determine the construction and legal effect of a written contract to arbitrate as a matter of law. Id. In light of the policy favoring arbitration, this court will not construe the agreement strictly but will read it to include subjects within the spirit of the parties' agreement. Courtyard Health & Rehab., LLC v. Arnold, 2016 Ark. 62.

Courts must address two threshold issues affirmatively when determining whether to grant a motion to compel arbitration: (1) is there a valid agreement to arbitrate between the parties, and (2) if such an agreement exists, does the dispute fall within its scope. HPD, LLC v. TETRA Techs., Inc., 2012 Ark. 408, at 6, 424 S.W.3d 304, 308. In answering these questions, doubts regarding arbitrability must be resolved in favor of arbitration. Id. We review a circuit court's order denying a motion to compel arbitration de novo on the record. Carmody v. Raymond James Fin. Servs., Inc., 373 Ark. 79, 281 S.W.3d 721 (2008).

Turning first to the threshold issue of validity, we must determine whether Mitchell had authority to bind Holliman to the arbitration agreement. The burden of proving an agency relationship lies with Courtyard as the party asserting its existence. See Lamb, 2016 Ark. 101');">2016 Ark. 101, at 4.

Courtyard argues that the circuit court erred in its determination that Mitchell lacked the authority to bind Holliman to the arbitration agreement. Specifically, they argue that the Adult Maltreatment Custody Act (AMCA), Arkansas Code Annotated sections 9-20-101 et seq. (Repl. 2015), gives APS the authority to enter into the arbitration agreement. They argue that the rationale this court applied in Carmody, 373 Ark. 79, 281 S.W.3d 721, and GGNSC Holdings, 2016 Ark. 101');">2016 Ark. 101 compels this conclusion. We disagree.

A custodian under the AMCA is "the Department of Human Services while the department is exercising a seventy-two-hour hold on an endangered or impaired person or during the effective dates of an order granting custody to the department." Ark. Code Ann. ยง 9-20-103. ...


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