Kindred Nursing Centers Limited Partnerhship D/B/A Winchester Centre for Health and Rehabilitation N/K/A Fountain Circle Health and Rehabilitation v. Beverly Wellner Individually and on Behalf of the Estate of Joe P. Wellner, and on Behalf of the Wrongful Death Beneficiaries of Joe P. Wellner
533 S.W.3d 189
| Ky. | 2017Background
- Consolidated Kentucky cases from Extendicare Homes, Kindred v. Clark, and Kindred v. Wellner. Kentucky Supreme Court decision in Extendicare (2015) was partially reviewed by the U.S. Supreme Court in Kindred (2017).
- Kentucky had adopted a "clear-statement rule" in Extendicare: an agent under a power of attorney (POA) cannot bind a principal to a pre-dispute arbitration agreement unless the POA expressly and clearly grants that authority.
- The Wellner POA contained: (1) authority to "demand, sue for, collect...including the right to institute legal proceedings," and (2) authority to "make, execute and deliver...contracts of every nature in relation to both real and personal property." Kindred relied on those two provisions to justify arbitration.
- The U.S. Supreme Court in Kindred reversed Kentucky’s clear-statement rule as incompatible with the Federal Arbitration Act (FAA) and remanded the Wellner case, asking Kentucky to determine whether its alternative holding about the Wellner POA was "wholly independent" of the tainted clear-statement rule.
- On remand the Kentucky Supreme Court reaffirmed its original interpretation of the Wellner POA as not authorizing pre-dispute arbitration at nursing-home admission, holding that that interpretation was independent of and not tainted by the clear-statement rule.
Issues
| Issue | Kindred/Extendicare (Plaintiff) Argument | Wellner/Respondent (Defendant) Argument | Held |
|---|---|---|---|
| Whether the Wellner POA authorized agent to sign a pre-dispute arbitration agreement on admission to a nursing home | Agent had authority under POA clauses to institute legal proceedings and to make contracts relating to personal property, including chose-in-action (so could bind principal to arbitration) | The POA language did not relate to admitting a resident or waiver of constitutional access-to-courts/jury rights; arbitration at admission was unrelated to property or enforcement of existing claims | Court held POA did not authorize execution of pre-dispute arbitration at admission — the act was not tied to property or existing claims, so no authority existed under those provisions |
| Whether the Court’s prior "clear-statement rule" impermissibly influenced the Court’s construction of the Wellner POA | Clear-statement rule was central; absent it ambiguous POA language should not permit waiver of jury/access rights | The Court’s alternative reasoning rejecting authorization was independent of the clear-statement rule and rested on ordinary contract/agency interpretation | Court held its Wellner-POA construction was "wholly independent" of the clear-statement rule and therefore remains valid on remand |
| Whether arbitration agreements are "contracts in relation to ... personal property" (i.e., choses-in-action) | Arbitration agreements concern potential claims (choses-in-action) and thus fall within "contracts relating to personal property" language | Arbitration agreement executed at admission did not affect property rights; it affected constitutional rights (access to courts/jury) and was therefore not covered by POA language about property | Court held pre-dispute arbitration executed at admission did not pertain to the principal’s property rights and so was not authorized under the POA provision |
| Whether broad/vague POA language (as in Clark) can permit agent to bind principal to arbitration absent a clear statement | Broad/vague general powers (Clark POA) can be construed to authorize arbitration waivers | Even broad language must be tied to the principal’s affairs; context matters (Clark language was broader than Wellner) | Court noted Clark POA language authorized arbitration absent clear-statement rule; contrast shows the Court is willing to infer arbitration authority when POA language sufficiently broad/contextual |
Key Cases Cited
- Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015) (Kentucky Supreme Court decision adopting the clear-statement rule and analyzing Wellner and Clark POAs)
- Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky. 2012) (general rule: authority to waive access to courts/jury is not lightly inferred)
- Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530 (2012) (Supreme Court vacated state-court decisions singling out arbitration rules inconsistent with FAA)
- Garland v. Commonwealth, 458 S.W.3d 781 (Ky. 2015) (procedural note on waiver of arguments not pursued on appeal)