United States District Court, N.D. Alabama, Southern Division
DAVID PROCTOR, UNITED STATES DISTRICT JUDGE.
matter is before the court on Defendant's motion to
compel arbitration. (Doc. # 4).
motion has been fully briefed. (Docs. # 5, 7, 8). After
careful consideration, and for the reasons explained below,
the court concludes the motion (Doc. # 4) is due to be
McElrath died of complications from infected bed sores on
November 16, 2017, about four months after he became a
long-term care resident at Birmingham Nursing and
Rehabilitation Center (“Birmingham Nursing”).
(Doc. # 1-1 at ¶¶ 7-8, 14). In October 2018,
McElrath's estate sued Birmingham Nursing for negligence,
wantonness, and negligence per se in Alabama state court,
claiming Birmingham Nursing's neglect of McElrath led to
his death. (Id. at ¶¶ 20-36). Birmingham
Nursing removed the case to this court on November 8, 2018
(Doc. # 1) and filed a motion to compel arbitration on
December 11, 2018 (Doc. # 4).
experienced declining health for some time before he became a
resident at Birmingham Nursing. (Docs. # 7-1 at 2, ¶ 4;
7-2 at 2, ¶ 5). After his wife died in December 2016, he
needed help managing his financial affairs and keeping up
with his monthly bills and expenses. (Doc. # 7-1 at 2, ¶
3). On February 27, 2017, McElrath executed a power of
attorney granting a family friend, Toya Spencer, authority to
make certain decisions on his behalf. (Id. at 2,
¶ 6; id. at 6-7).
went on, McElrath required more frequent hospitalizations for
longer periods of time. (Doc. # 7-2 at 3, ¶ 9). His
mental status also declined. (Docs. # 7-1 at 2, ¶ 8; 7-2
at 10). He began to be confused about where he was, the time
of day, and the time of year. (Docs. # 7-1 at 2, ¶ 8;
7-2 at 3, ¶ 11). He had difficulty communicating his
basic wants or needs, such as whether he was uncomfortable,
hungry, or wanted to watch TV. (Docs. # 7-1 at 3, ¶ 8;
7-2 at 3, ¶ 12). He had trouble recognizing friends and
relatives he had known for years when they visited him, and
had to be reminded frequently about who people were and how
he knew them. (Docs. # 7-1 at 3, ¶ 8; 7-2 at 4, ¶
one hospitalization, Toya Spencer made discharge plans for
McElrath to be admitted to a skilled nursing facility. (Doc.
# 7 at 3). At that time, McElrath was “mentally
confused and physically incapacitated.” (Doc. # 7-1 at
3, ¶ 9). His son's affidavit explains that McElrath
“was totally dependent and functioned like a child. He
couldn't even carry-on [sic] a meaningful
conversation.” (Doc. # 7-2 at 4, ¶ 14). Spencer
met with a representative from Birmingham Nursing and made
arrangements for McElrath to be admitted to its nursing and
rehabilitation center upon his discharge from the hospital.
(Doc. # 7 at 3). As part of the admission process, Spencer
signed various admissions forms for McElrath, including an
arbitration agreement. (Docs. # 7-1 at 3-4, ¶¶
9-13; 5-1 at 7-11). McElrath was not present when Spencer
signed the arbitration agreement, never saw the arbitration
agreement, and did not give Spencer express permission to
sign the arbitration agreement or other admission forms on
his behalf. (Doc. # 7-1 at 3-4, ¶¶ 10-12). Spencer
declares she never told McElrath about signing his admission
paperwork or the arbitration agreement because she
“knew it just would have confused him even more.”
(Id. at 4, ¶ 13).
arbitration agreement identifies “Birmingham Nursing
and Rehabilitation Center, LLC” and “Essie
Mcelrath” as the “Parties to the
Agreement.” (Doc. # 5-1 at 7). It provides that
“[t]he parties understand and agree that all claims,
disputes, and controversies of any kind between the parties
arising out of or relating in any way to . . . any service or
health care provided by the Facility to the Resident shall be
resolved exclusively by binding arbitration.”
(Id.). The agreement expressly states that it covers
“any claim for . . . negligence, medical malpractice,
wrongful death, or any other claim based on any departure
from accepted standards of medical, nursing, or health care
whether sounding in tort or contract.” (Id.).
It also provides, “If this Agreement is signed by
Resident's Authorized Representative, the Authorized
Representative hereby certifies that he/she is duly
authorized to execute this Agreement for the Resident.”
(Id. at 10-11). The agreement identifies Toya
Spencer as “Resident's Authorized
Representative.” (Id. at 11). It was signed by
Spencer and by Birmingham Nursing's representative Rosa
Stephens on June 5, 2017. (Id.).
Federal Arbitration Act (“FAA”) makes arbitration
agreements “valid, irrevocable, and enforceable save
upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. Section
3 of the FAA provides that a district court must, “on
application of one of the parties, ” stay any action
involving an issue “referable to arbitration
under” a prior written arbitration agreement.
Id., § 3. The FAA also grants district courts
authority to issue “an order directing that . . .
arbitration proceed in the manner provide for” in a
written arbitration agreement. Id., § 4.
Birmingham Nursing seeks to invoke its rights under both
§ 3 and § 4 of the FAA: it asks the court to stay
this action pending arbitration and order McElrath's
estate to arbitrate this dispute. The estate has just one
objection: it claims McElrath never agreed to arbitrate this
dispute and thus that his estate has every right to pursue
its claims against Birmingham Nursing in a judicial forum.
Specifically, the estate claims that Toya Spencer, who signed
the arbitration agreement in question, had no authority to
bind McElrath to the terms of the agreement. The parties'
disagreement about whether this case belongs in arbitration
thus turns on just one question: Did Toya Spencer's
agreement to enter into Birmingham Nursing's arbitration
contract bind Essie McElrath (and, consequently, his
estate) to the terms of that document?
the FAA, “arbitration is a matter of contract.”
Henry Schein, Inc. v. Archer & White Sales,
Inc., No. 17-1272, 2019 WL 122164, at *1 (U.S. Jan. 8,
2019). Thus, when deciding whether a contract to arbitrate a
dispute exists, courts “should apply ordinary state-law
principles that govern the formation of contracts.”
First Options of Chicago, Inc. v. Kaplan, 514 U.S.
938, 944 (1995). Under Alabama law, a mentally incompetent
person is not bound to an arbitration agreement signed on his
behalf by someone not authorized to do so. SSC Montgomery
Cedar Crest Operating Co., LLC v. Bolding, 130 So.3d
1194, 1199 (Ala. 2013). Though the doctrine of apparent
authority allows mentally competent nursing home residents
who passively permit another to sign an arbitration agreement
on their behalf to be bound by the agreement, that rule does
not apply if the resident is mentally incompetent.
Id. at 1198-99.
estate has submitted evidence that McElrath was mentally
incompetent when Toya Spencer signed the arbitration
agreement on his behalf (Docs. # 7-1, 7-2), and Birmingham
Nursing does not dispute that evidence. Instead, Birmingham
Nursing argues that Spencer nevertheless had authority to
bind McElrath to the arbitration agreement based on a power
of attorney McElrath had previously granted Spencer.
McElrath's estate does not dispute that McElrath validly
executed the power of attorney, giving Spencer authority to
act as McElrath's agent with respect to certain matters.
It merely argues that the power of attorney did not give
Spencer power to act as McElrath's agent in this
matter-that is, agreeing to arbitration on McElrath's
behalf. The court must therefore determine the scope of the
authority conferred on Spencer by the power of attorney.
Alabama Supreme Court has held that a validly executed
durable power of attorney gives the grantor's
attorney-in-fact the power to enter an arbitration agreement
on the grantor's behalf. Troy Health & Rehab.
Ctr. v. McFarland, 187 So.3d 1112, 1121-22 (Ala. 2015).
In Troy Health, a Mr. Wilcoxon had executed a
“Durable General Power of Attorney” authorizing
his daughter “to act in, manage, and conduct all of
Wilcoxon's affairs.” Id. at 1116 (internal
quotation marks and brackets omitted). His daughter
subsequently signed an arbitration agreement on his behalf
with Troy Health and Rehabilitation Center, where Wilcoxon
was a resident, agreeing to arbitrate all claims between
Wilcoxon and Troy Health. Id. at 1117. Wilcoxon
later died at the Troy Health facility, and the personal
representative for his estate sued Troy Health on various
tort and contract claims. Id. Troy Health moved to
compel arbitration based on the arbitration agreement signed
by Wilcoxon's daughter as his attorney-in-fact.
Id. at 1117-18. Because ...