557 S.W.3d 286
Ark. Ct. App.2018Background
- Mabel Keller Cook, an elderly nursing-home resident, was admitted to Hickory Heights in 2015; her daughter Ethel signed an Admission Agreement and an Arbitration Agreement as "Responsible Party." Mabel did not sign either document.
- Mabel had previously executed a durable power of attorney (Feb. 2014) appointing Charles A. Cook as her attorney-in-fact; no guardianship existed.
- The Arbitration Agreement declared that disputes between the "Resident and/or Responsible Party" and the facility would be resolved exclusively by binding arbitration and contained a checkbox requesting documentary proof of authority (left blank).
- Mabel sued Hickory Heights in 2017 alleging sexual assault and negligence arising from her stay; Hickory Heights moved to compel arbitration based on the documents Ethel signed.
- Hickory Heights argued Ethel bound Mabel either by signing in her individual capacity (creating a contract that made Mabel a third-party beneficiary) or by validly signing as a representative; Mabel argued Ethel lacked authority to bind her and signed only in a representative capacity.
- The trial court denied the motion to compel arbitration; the court of appeals affirmed, concluding the contract was ambiguous about Ethel’s capacity and construing the ambiguity against the drafter (the facility).
Issues
| Issue | Plaintiff's Argument (Cook) | Defendant's Argument (Hickory Heights) | Held |
|---|---|---|---|
| Whether there is a valid arbitration agreement binding Mabel | Ethel lacked authority; she signed as a representative only, so no valid arbitration agreement binds Mabel | Ethel signed as "Responsible Party" in her individual capacity or created a contract making Mabel a third-party beneficiary, so arbitration applies | Ambiguity whether Ethel signed personally or as agent; construed against drafter — Ethel signed as representative without authority, so no valid agreement binding Mabel |
| Whether Mabel is a third-party beneficiary of the contract Ethel signed | No — because no valid underlying contract formed by Ethel in her individual capacity | Yes — the agreement was intended to benefit the resident (Mabel) and thus binds her | Third-party-beneficiary doctrine inapplicable because no valid contract between Hickory Heights and Ethel (Ethel lacked authority to bind as representative) |
| Whether the contract language unambiguously shows intent to bind the resident via a "Responsible Party" signature | The documents are ambiguous and required documentary proof of authority (which was not provided) | Contract language refers to the "Resident and/or Responsible Party," so unambiguous that signing binds the resident | Contract is susceptible to multiple constructions; ambiguity resolved against the drafter (facility), favoring Cook |
| Standard for reviewing denial of motion to compel arbitration | N/A (procedural) | N/A (procedural) | Review de novo; doubts about arbitrability resolved in favor of arbitration, but because of ambiguity and lack of authority, arbitration was not compelled |
Key Cases Cited
- Courtyard Gardens Health & Rehab., LLC v. Quarles, 428 S.W.3d 437 (Ark. 2013) (arbitration agreements construed like other contracts; agent signing without authority cannot bind resident)
- Progressive Eldercare Servs.-Chicot, Inc. v. Long, 449 S.W.3d 324 (Ark. App. 2014) (representative who lacked power of attorney could not bind resident to arbitration)
- Bigge Crane & Rigging Co. v. Entergy Ark., Inc., 457 S.W.3d 265 (Ark. 2015) (presumption that contracts benefit only parties unless clear intent to benefit third party)
- Broadway Health & Rehab, LLC v. Roberts, 524 S.W.3d 407 (Ark. App. 2017) (daughter who signed as "daughter" lacked authority to bind mother; third-party-beneficiary doctrine inapplicable where no valid agreement)
- Pine Hills Health & Rehabilitation, LLC v. Talley, 546 S.W.3d 492 (Ark. App. 2018) (signature by family member as "Responsible Party" with no documentary proof created no valid agreement to arbitrate)
- Price v. Willbanks, 374 S.W.3d 28 (Ark. App. 2009) (ambiguities in contracts construed against the drafter)
- Carter v. Four Seasons Funding Corp., 97 S.W.3d 387 (Ark. 2003) (contractual agreements construed against the drafter)