Progressive Eldercare Services-Chicot, Inc. v. Long

Cite as 2014 Ark. App. 661

ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-14-401

PROGRESSIVE ELDERCARE Opinion Delivered November 19, 2014
SERVICES – CHICOT, INC., D/B/A
LAKE VILLAGE REHABILITATION
AND CARE CENTER AND CHICOT APPEAL FROM THE CHICOT
OPERATIONS, LLC D/B/A LAKE COUNTY CIRCUIT COURT
VILLAGE REHABILITATION AND [NO. CV-12-80]
CARE CENTER
APPELLANTS
V. HONORABLE DON GLOVER,
JUDGE
SUE LONG, AS THE
ADMINISTRATOR FOR THE ESTATE AFFIRMED
OF MARION L. “SUGAR” LONG,
DECEASED
APPELLEE

DAVID M. GLOVER, Judge

Appellee, Sue Long, as administrator for the estate of her husband, Marion L. “Sugar”

Long, filed suit against appellants, Progressive Eldercare Services—Chicot, Inc. d/b/a Lake

Village Rehabilitation and Care Center and Chicot Operations, LLC d/b/a Lake Village

Rehabilitation and Care Center (Progressive), seeking damages for negligence and wrongful

death. Progressive filed a motion to compel arbitration, which the trial court denied. In

denying the motion to compel, the trial court determined that Sue Long did not have actual

or apparent authority to sign the arbitration agreement. The trial court further determined

that Marion Long was not a third-party beneficiary of the agreement that was executed by

Sue Long. Progressive does not appeal the decision regarding lack of authority. Rather, the
Cite as 2014 Ark. App. 661

two issues it raises in this appeal both challenge the trial court’s decision regarding third-

party-beneficiary status: 1) under Arkansas contract law, the third-party-beneficiary doctrine

applies to enforce an arbitration agreement against a nursing-home resident when the

agreement was entered into between the responsible party and the nursing-home defendant;

2) persuasive authority from the U.S. District Court for the Western District of Arkansas and

other state and federal jurisdictions further supports applying the third-party-beneficiary

doctrine to compel arbitration in these circumstances. We affirm the trial court’s denial of

the motion to compel arbitration.

Background

In its February 6, 2014 order, the trial court explained the context in which the case

arose and its rationale for denying the motion to compel. On July 7, 2010, Marion Long,

Sue’s husband and the decedent in this case, became a resident of the Lake Village

Rehabilitation and Care Center. When he was admitted, Sue Long signed all of the required

documents, including an arbitration agreement. Marion Long resided at the center until on

or about September 1, 2010, when appellant Progressive Eldercare Services—Chicot, Inc.,

assumed control and operation of the facility. It is undisputed that Sue Long did not have

a power of attorney or any court or legal document authorizing her to serve as Marion

Long’s agent, i.e., to sign on his behalf. It is also undisputed that Marion Long was

incapacitated and confused at the time of his admission, preventing him from being able to

understand the contents of the admission forms and to make care and treatment decisions,

even though he had not been declared mentally incompetent. None of the admission

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Cite as 2014 Ark. App. 661

documents were ever executed by Marion Long; rather, they were executed by Sue Long.

The arbitration agreement signed by Sue provides in part:

The facility and Patient or Legal Representative agree to first utilize the Facility
Grievance process to resolve all concerns, but if not satisfied, there is agreement to
participate in arbitration to settle a dispute between the parties. Arbitration assists in
the resolution of the concern faster and less expensive then litigating the dispute in the
courts. An unrelated and unbiased individual, the arbitrator, is selected by the Patient
or Legal Representative and the Facility, to hear the dispute. Specifically, the Patient
or Legal Representative will select the Arbitrator from a list of five names provided
by the Nursing Facility. The patient or Legal Representative may select the
Arbitrator from this list or propose list of five names to serve as the Arbitrator to the
Nursing Facility for its selection. The list must contain the names of certified
Arbitrators with five or more years of experience and be licensed Arkansas attorneys
whose offices are located within the State of Arkansas. The Nursing Facility will
contact the selected Arbitrator and finalize the appointment. The Resident or Legal
Representative will have the right to be represented by an attorney at the Arbitration
hearing. Each party shall bear its own expenses of preparing for and participation in
the Arbitration. The Nursing Facility will pay the Arbitrator’s fee and the court
reporter’s fee. The decision of the arbitrator binds both parties and is final.

She signed her name on a line under which was printed, “Patient or Legal Representative.”

In explaining its rationale for denying the motion to compel arbitration, the trial court

explained that it considered the dispositive issue to be whether Sue Long had actual or

apparent authority to sign the arbitration agreement. As noted earlier, the trial court

concluded that she did not, and that decision is not challenged in this appeal. The trial court

then addressed Progressive’s contention that the arbitration agreement was binding because

Marion Long was a third-party beneficiary to the agreement that was executed by his wife,

Sue Long. The trial court stated that it was not persuaded by the argument and denied the

motion to compel.

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Cite as 2014 Ark. App. 661

Our jurisdiction to hear this appeal is pursuant to Rule 2(a)(12) of the Arkansas Rules

of Appellate Procedure–Civil and Arkansas Code Annotated section 16-108-228(a)(1),

whereby interlocutory appeals from orders denying motions to compel arbitration are

permitted. See also Courtyard Gardens Health & Rehab., LLC v. Quarles, 2013 Ark. 228, 428

S.W.3d 437. We review a trial court’s order denying a motion to compel arbitration de

novo on the record. Id.

Because both of Progressive’s points of appeal challenge only the denial of third-party-

beneficiary status to Mr. Long, with the first point relying upon Arkansas law and the second

point relying upon cases from other jurisdictions, we can most easily address them together.

Progressive contends that there are two elements that are necessary in order to apply

the third-party-beneficiary doctrine under Arkansas law: 1) there must be an underlying valid

agreement between two parties (citing Andrews v. Victor Metal Prods. Corp., 239 Ark. 763, 394

S.W.2d 123 (1965)), and 2) there must be evidence of a clear intention to benefit a third

party (citing Perry v. Baptist Health, 358 Ark. 238, 189 S.W.3d 54 (2004)). We do not

disagree. Rather, the problem we have with Progressive’s argument is that we do not have

to go any further than the first element to conclude that the doctrine does not apply here.

There is not a valid underlying agreement between two parties.

Sue Long signed the admission documents, particularly the arbitration agreement, in

her representative capacity, not her individual capacity. The documents were clearly

designed to be signed by the patient himself or his “Legal Representative.” In its amended

motion to compel arbitration, Progressive stated, “Sue Long, as Mr. Marion Long’s

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representative, executed a binding Arbitration Agreement with the intent to encompass the

claims made in [the] complaint.” (Emphasis added.) A copy of the arbitration agreement

was attached to the motion and incorporated by reference. As determined by the trial court,

however, she was not authorized to sign the documents as Mr. Long’s representative. That

decision has not been challenged in this appeal. Consequently, the underlying agreements

were not valid, and without that first prong, the third-party-beneficiary doctrine does not

apply.

With respect to the cases decided in other jurisdictions and relied upon by

Progressive, it is axiomatic that we are not compelled to follow their holdings, and more

importantly, we did not find them convincing under the circumstances presented here.

Affirmed.

PITTMAN and WHITEAKER, JJ., agree.

Kutak Rock LLP, by: Mark W. Dossett, Jeff Fletcher, and Max Deitchler, for appellants.

David A. Couch, PLLC, by: David A. Couch, for appellee.