Cullinane v. Beverly Enters. - Neb.
912 N.W.2d 774
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).
- The ADR Agreement stated arbitration would resolve covered disputes, that it was part of the admission agreement, and that signing was not a condition of admission (disclaimer prominent on first page).
- Eugene had a durable power of attorney for Helen; he signed the ADR Agreement at admission. Eugene and son Thomas later attested by affidavit they were told the forms were required and were not given an opportunity to review or told arbitration was optional.
- Thomas, as special administrator for Helen’s estate, sued GLCV for wrongful death; GLCV moved to compel arbitration under the Federal Arbitration Act (FAA) based on the ADR Agreement.
- The district court denied GLCV’s motion, finding Eugene’s execution of the ADR Agreement was not binding on Helen or her estate (implicitly on fraud grounds); GLCV appealed.
Issues
| Issue | Plaintiff's Argument (Thomas) | Defendant's Argument (GLCV) | Held |
|---|---|---|---|
| Is the order denying a motion to compel arbitration final and appealable? | Order is final because it affects substantial rights and was made in a special proceeding. | FAA §16 governs appeals from orders denying petitions under §4; appeal appropriate. | Yes — denial is a final, appealable order under Neb. Rev. Stat. §25-1902 as a special proceeding. |
| Does the FAA apply (i.e., interstate commerce)? | FAA applies because parties and complaint allege interstate transaction and ADR form states transaction involves interstate commerce. | Agreed FAA governs. | Yes — transaction falls within FAA scope. |
| Who decides arbitrability (court or arbitrator)? | Court should decide enforceability because no clear and unmistakable delegation to arbitrator; Thomas challenged validity by fraud. | GLCV did not invoke a delegation clause or argue arbitrator should decide; sought enforcement. | Court decides arbitrability; no clear and unmistakable delegation present. |
| Was the ADR Agreement enforceable (formation/validity), given allegations of fraud? | Eugene was induced to sign by misrepresentations (told forms were required); reliance reasonable; thus agreement voidable/unenforceable as to Helen. | No proper proof of fraud; if signed, signature binds absent fraud; GLCV submitted affidavits on standard procedure. | Held for Thomas: evidence (affidavits viewed favorably to nonmoving party) supported fraudulent inducement; ADR Agreement not binding on Helen or estate. |
Key Cases Cited
- AT&T Technologies v. Communications Workers, 475 U.S. 643 (1986) (arbitrability presumptively for court absent clear and unmistakable delegation)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (fraud-in-the-inducement challenges to contract are for court unless delegation clause says otherwise)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state rules that disproportionately disadvantage arbitration agreements)
- Granite Rock Co. v. Teamsters, 561 U.S. 287 (2010) (distinguishes gateway questions for court vs. arbitrator; formation questions for court)
- Webb v. American Employers Group, 268 Neb. 473 (2004) (Nebraska applies state procedural rules to finality of orders denying motions to compel arbitration under the FAA)