Cullinane v. Beverly Enters. - Neb.
300 Neb. 210
| Neb. | 2018Background
- Helen Cullinane, an 88-year-old dementia patient, was admitted to Golden LivingCenter - Valhaven (GLCV) in 2010; her husband Eugene signed admission paperwork including an "Alternative Dispute Resolution Agreement" (ADR Agreement).
- Eugene had a durable power of attorney for Helen and admits he signed the ADR Agreement at admission; Thomas Cullinane later became special administrator and sued GLCV for wrongful death.
- The ADR Agreement required mediation and then binding arbitration for covered disputes and included bold disclaimers stating arbitration was not a condition of admission.
- GLCV moved to compel arbitration under the Federal Arbitration Act (FAA); Thomas resisted, alleging Eugene was induced to sign by the facility staff’s misrepresentation that signing was required for admission.
- The district court denied GLCV’s motion, concluding Eugene’s execution of the ADR Agreement did not bind Helen or her estate (implicitly finding fraud), and GLCV appealed.
Issues
| Issue | Plaintiff's Argument (Thomas) | Defendant's Argument (GLCV) | Held |
|---|---|---|---|
| Was the order denying the motion to compel arbitration appealable? | Order was final because it denied arbitration and affected substantial rights. | FAA appealability unclear in state court, but state final-order rules apply. | Yes — denial was a final, appealable order under Nebraska law. |
| Does the FAA apply (interstate commerce)? | FAA governs because admission agreement involved interstate commerce per parties and ADR language. | Agreed FAA applies. | Yes — transaction fell within FAA scope. |
| Who decides arbitrability when formation/enforceability is challenged? | Court should decide because Thomas challenges formation/enforceability (fraud). | GLCV argued arbitrator could decide but did not point to a clear delegation clause. | Court decides arbitrability absent a clear and unmistakable delegation clause. |
| Was the ADR Agreement enforceable against Helen’s estate (fraud claim)? | Eugene was told signing was required for admission; he would not have signed otherwise — fraudulent misrepresentation induced signature. | No fraud: signatory had opportunity to read; disclaimers show agreement was optional. | Trial court’s implicit finding of fraudulent inducement was supported; ADR Agreement not binding on Helen or her estate. |
Key Cases Cited
- AT&T Technologies v. Communications Workers, 475 U.S. 643 (U.S. 1986) (court decides gateway arbitrability issues absent clear delegation)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (fraud-in-the-inducement claims can defeat arbitration when courts decide formation)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (delegation clauses must be clear and unmistakable for arbitrator to decide arbitrability)
- Webb v. American Employers Group, 268 Neb. 473 (Neb. 2004) (state procedure governs finality of orders denying FAA-based motions to compel arbitration)
- Aramark Uniform & Career Apparel v. Hunan, Inc., 276 Neb. 700 (Neb. 2008) (FAA governs contracts involving interstate commerce)