262 P.3d 1162
Or. Ct. App.2011Background
- Assisted Living Concepts, Inc. (ALC) owns an assisted living facility; Kim Maree Lewis was the facility's executive director.
- The Residency Agreement contains a broad arbitration clause covering claims arising from the agreement or the care provided.
- Decedent Dorothy Drury did not sign the Residency Agreement; Eddie Drury signed admission paperwork acting without guardian, conservator, personal representative, or power of attorney.
- Decedent suffered dementia and lacked capacity at the time of execution; later records show worsening memory impairment and confusion.
- Plaintiff, as personal representative of decedent’s estate, sued for wrongful death; defendants moved to compel arbitration; trial court denied on unconscionability and did not reach arbitration enforceability; on appeal, issue is whether decedent was bound as a third-party beneficiary or by assent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was decedent bound as a third-party beneficiary to the arbitration clause? | Estate is not bound because decedent did not assent. | Decedent was a third-party donee beneficiary and could be bound. | No; decedent not bound because lacked assent/capacity. |
| Did decedent manifest assent to the Residency Agreement? | Assent may be presumed from asserting rights under contract. | Assent absent due to dementia and incapacity. | Decedent could not assent due to incapacity; plaintiff did not assent on decedent's behalf. |
| Can plaintiff enforce arbitration against defendants as third-party beneficiary? | Estate may enforce rights if properly aligned with beneficiary status. | Third-party beneficiary cannot enforce unless they assented. | Estate cannot enforce arbitration against defendants. |
| Does the FAA apply, and how does state contract law govern enforceability against nonparties? | FAA applicability does not change the result; state contract law governs enforceability against nonparties. |
Key Cases Cited
- Outdoor Media Dimensions Inc. v. State of Oregon, 331 Or. 634 (2001) (right-for-the-wrong-reason approach permits affirming on alternative basis)
- Erickson v. Grande Ronde Lbr. Co., 162 Or. 556 (1939) (assent of third-party beneficiary presumed from asserting rights)
- Sisters of St. Joseph v. Russell, 318 Or. 370 (1994) (beneficiary status and implied promise where donor intends benefit)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (third-party beneficiary theories enable enforcement of contract against nonparties)
- Comer v. Micor, Inc., 436 F.3d 1098 (9th Cir. 2006) (non-signatory sometimes not bound to arbitration under certain plans)
- AT&T Technologies v. Communications Workers, 475 U.S. 643 (1986) (arbitration requires mutual assent forming a contract)