Wisler v. Manor Care of Lancaster PA, LLC

J-A18026-15

2015 PA Super 189

H. RANDALL WISLER AND H. KEITH IN THE SUPERIOR COURT OF
WISLER, CO-EXECUTORS OF THE PENNSYLVANIA
ESTATE OF HERBERT C. WISLER,
DECEASED

Appellees

v.

MANOR CARE OF LANCASTER PA, LLC
D/B/A MANORCARE HEALTH SERVICES-
LANCASTER, HCR MANOR CARE, INC.,
MANORCARE HEALTH SERVICES, INC.,
MANOR CARE, INC., HCR HEALTHCARE,
LLC, HCR HEALTHCARE II, LLC, HCR
HEALTHCARE III, LLC, AND HCR
HEALTHCARE IV, LLC

Appellants No. 1226 MDA 2014

Appeal from the Order entered June 27, 2014
In the Court of Common Pleas of Lancaster County
Civil Division at No: CI-12-09374

BEFORE: FORD ELLIOTT, P.J.E., STABILE, and MUSMANNO, JJ.

OPINION BY STABILE, J.: FILED SEPTEMBER 08, 2015

Appellants (collectively, ManorCare) appeal from an order sustaining in

part and overruling in part their preliminary objections to the complaint of

H. Randall and Keith Wisler (collectively, Executors), co-executors of the

estate of Herbert C. Wisler (Decedent). ManorCare contends the trial court

erred in refusing to compel arbitration of Executors’ claims arising out of

Decedent’s stay at a ManorCare nursing home. The trial court found the

arbitration agreement invalid, ruling that H. Randall Wisler, as power of
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attorney for Decedent, lacked the authority to enter into such an agreement.

Upon review, we affirm.

[Decedent] was a resident at [ManorCare Lancaster] from March
4, 2010 through April 28, 2010, and from August 13, 2010,
through October 11, 2010. Thereafter, [Decedent] died on
February 6, 2011. At the time of his [first] admission,
[Decedent] required assistance with care for all of his activities
of daily living. His medical history was significant for diabetes
(type 2), chronic kidney disease, [p]acemaker, Orthostatis,
coronary artery disease, multiple [cerebrovascular accidents,
i.e., strokes], Hyperlipidemia, depression, prostate and colon
cancer, swallowing dysfunction, acute congestive heart failure,
anemia[,] and protein calorie malnutrition.

On March 4, 2010, the date of [D]ecedent’s first admission to
[ManorCare Lancaster], H. Randall Wisler, the [D]ecedent’s son,
co-executor, and co-plaintiff in this matter, signed [ManorCare
Lancaster’s] admission papers. On March 30, 2010, H. Randall
Wisler further signed an [A]rbitration [A]greement as part of the
admission process. This [A]greement provided that any disputes
arising out of or in any way relating to the agreement or to
[Decedent’s] stay at [ManorCare Lancaster] “shall be submitted
to binding arbitration.”

At the time of [D]ecedent’s second admission on August 13,
2010, his son, H. Randall Wisler, again signed the admissions
paperwork. Several days later, H. Randall Wisler was again
asked to sign a second [A]rbitration [A]greement[1] on August
16, 2010.

At all times relevant to the [D]ecedent’s admissions to
ManorCare, H. Randall Wisler had a power of attorney for his
father. H. Randall Wisler advised ManorCare that he possessed
his father’s power of attorney. However, ManorCare did not

____________________________________________

1
The first and second arbitration agreements are identical, except for the
signature dates. For convenience, we will refer to the two agreements as if
they were one.

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obtain a copy of the power of attorney, nor could H. Randall
Wisler produce a copy at the time of his deposition.

[Executors] were appointed executors of [Decedent’s] estate on
October 4, 2011, by the Register of Wills of Lancaster County.
[Executors] filed a complaint on November 27, 2012, alleging
that [ManorCare’s] professional negligence and reckless conduct
caused their [D]ecedent severe injuries during his two
admissions at [ManorCare Lancaster]. Those injuries included
numerous falls, poor skin care, urinary tract infections,
malnutrition, dehydration, poor hygiene, and severe pain.

Trial Court 6/27/14, at 2-3 (internal record citations omitted). Executors

bring their claims in their representative capacities as co-executors of

Decedent’s estate under the Survival Act. See 42 Pa.C.S.A. § 8302.

Executors did not bring claims in their individual capacities as Decedent’s

sons under the Wrongful Death Act. See id. § 8301(b).

ManorCare filed preliminary objections to Executors’ complaint,

including a request to compel arbitration. The parties engaged in discovery

relating to the enforceability of the Arbitration Agreement. After receiving

briefs, the trial court entered an order sustaining in part and overruling in

part ManorCare’s preliminary objections. In relevant part, the trial court

refused to compel arbitration, finding that H. Randall Wisler lacked authority

to sign the Arbitration Agreements on Decedent’s behalf. The trial court

declined to consider other reasons Executors advanced in favor of refusing to

compel arbitration. This appeal followed.2

____________________________________________

2
Though the order sustaining in part and overruling in part the preliminary
objections is interlocutory, we have appellate jurisdiction over the order vis-
(Footnote Continued Next Page)

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On appeal, ManorCare raises the following question for review:

Whether the trial court erred in concluding that the Appellee, H.
Randall Wisler, did not have the authority to bind his father,
[Decedent], to [ManorCare’s] Arbitration Agreements where
Appellees concede having a [p]ower of [a]ttorney, but have not
produced the [p]ower of [a]ttorney document?

Appellants’ Brief at 5.

Before we reach the merits, we must address Executors’ claim that

ManorCare waived appellate review by briefing deficiencies. Specifically,

Executors claim ManorCare waived its argument by failing to comply with

Pa.R.A.P. 2117(c),3 which requires an appellant to state where and how it

_______________________
(Footnote Continued)

à-vis the refusal to compel arbitration, under the Uniform Arbitration Act, 42
Pa.C.S.A. § 7320, and Pa.R.A.P. 311(a)(8).
3
Rule 2117(c), verbatim, reads:

(c) Statement of place of raising or preservation of issues.
Where under the applicable law an issue is not reviewable on
appeal unless raised or preserved below, the statement of the
case shall also specify:

(1) The state of the proceedings in the court of first
instance, and in any appellate court below, at which, and
the manner in which, the questions sought to be reviewed
were raised.

(2) The method of raising them (e.g. by a pleading, by a
request to charge and exceptions, etc.).

(3) The way in which they were passed upon by the court.

(4) Such pertinent quotations of specific portions of the
record, or summary thereof, with specific reference to the
places in the record where the matter appears (e.g. ruling
or exception thereto, etc.) as will show that the question
(Footnote Continued Next Page)

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preserved the issues on appeal, and Pa.R.A.P. 2119(e),4 which requires an

appellant to provide cross-reference citations from its argument section to

the statement of the case.

Executors’ waiver argument is somewhat puzzling, because we find

that ManorCare’s brief clearly complies with the applicable briefing rules.

ManorCare’s brief sufficiently sets forth its manner and method of issue

preservation—with citations to the reproduced record. See Appellants’ Brief

at 6-7. ManorCare’s statement of the case also succinctly frames the chief

issue on appeal as whether H. Randall Wisler had power of attorney to bind
_______________________
(Footnote Continued)

was timely and properly raised below so as to preserve the
question on appeal.

Where the portions of the record relied upon under this
subdivision are voluminous, they shall be included in an
appendix to the brief, which may, if more convenient, be
separately presented.

Pa.R.A.P. 2117(c).
4
Rule 2119(e) provides:

(e) Statement of place of raising or preservation of issues.
Where under the applicable law an issue is not reviewable on
appeal unless raised or preserved below, the argument must set
forth, in immediate connection therewith or in a footnote
thereto, either a specific cross reference to the page or pages of
the statement of the case which set forth the information
relating thereto required pursuant to Rule 2117(c) (statement of
place of raising or preservation of issues), or substantially the
same information.

Pa.R.A.P. 2119(e).

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Decedent to arbitration. See id. at 8-9. Further, ManorCare’s argument

section complies with Rule 2119(e), because it has cross-references to the

statement of the case. See id. at 15-17, 26.

Additionally, waiver, and therefore dismissal of an appeal, for briefing

defects is discretionary. See Pa.R.A.P. 2101. Even if ManorCare’s brief

were non-compliant, we would not impose such a harsh remedy, especially

given that none of Executors’ cited cases supports their waiver proposition.

Commonwealth v. Wholaver, 903 A.2d 1178, 1183-84 (Pa. 2006),

concerns mandatory waiver under Rule 1925, not prudential waiver for

briefing deficiencies under Rule 2101. Compare id. (quotation omitted)

(noting the “bright-line rule” that an appellant who fails to comply with Rule

1925 waives review), and Pa.R.A.P. 1925(b)(4)(vii) (“Issues not included in

the Statement and/or not raised in accordance with the provisions of this

paragraph (b)(4) are waived.”), with Pa.R.A.P. 2101 (providing that a

deficient brief “may be suppressed” and an appeal “may be dismissed” for

substantial defects) (emphases added). Executors’ two cited Commonwealth

Court decisions are wholly unpersuasive, because they concern waiver for

failure to raise issues before administrative agencies, and the accompanying

discussions of Rule 2117 are dicta. See McGaffin v. Workers’ Comp.

Appeal Bd. (Manatron, Inc.), 903 A.2d 94, 101-02 (Pa. Cmwlth. 2006)

(dismissing petition for review under Rule 1551 because petitioner failed to

raise issue before the Board); Jonathan Sheppard Stables v. Workers’

Comp. Appeal Bd. (Wyatt), 739 A.2d 1084, 1089-90 & n.6 (Pa. Cmwlth.

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1999) (refusing to consider some appellate issues under Rule 1551 because

petitioner did not raise them before the Board).

Finally, it is disingenuous for Executors to raise ManorCare’s alleged

briefing defects given that their brief violates Rule 2117(b), which prohibits

argument in the statement of the case.5 See Appellees’ Brief at 6-7

(characterizing the Arbitration Agreement as “grossly one-sided—and fatally

flawed”); id. at 14 (criticizing ManorCare for not following its standard

admissions procedures in this case); id. at 17 (accusing ManorCare of

“routinely depriv[ing] signatories of even a basic understanding of [its]

Arbitration Agreement”); id. at 18 (“There are Many Problems with the

Arbitration Agreement[.]”); id. at 24 n.14 (charging ManorCare with

violating the covenant of good faith and fair dealing). It is difficult to

distinguish Executors’ factual recitation from its argument. In sum, we reject

Executors’ waiver argument.

We proceed now to the merits of ManorCare’s argument. On appeal

from an order refusing to compel arbitration, our standard of review is as

follows:

____________________________________________

5
Executors contend that we must view all evidence in a light most favorable
to them as the party opposing arbitration. See Appellees’ Brief at 5 n.2
(citing Bellman v. i3Carbon, LLC, 563 F. App’x 608, 612 (10th Cir. 2014)).
It is beyond peradventure that the United States Court of Appeals for the
Tenth Circuit does not—and cannot—set forth the standard of review that
applies in this Court.

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Our review of a claim that the trial court improperly denied
the appellant’s preliminary objections in the nature of a
petition to compel arbitration is limited to determining
whether the trial court’s findings are supported by
substantial evidence and whether the trial court abused its
discretion in denying the petition.

Walton v. Johnson, 66 A.3d 782, 787 (Pa. Super. 2013)
(quoting Gaffer[ Ins. Co., Ltd. v. Discover Reins. Co.], 936
A.2d [1109,] 1112 [(Pa. Super. 2007)]). “In doing so, we
employ a two-part test to determine whether the trial court
should have compelled arbitration.” Elwyn[ v. Deluca], 48
A.3d [457,] 461 [(Pa. Super. 2012)] (quoting Smay v. E.R.
Stuebner, Inc., 864 A.2d 1266, 1270 (Pa. Super. 2004)). First,
we examine whether a valid agreement to arbitrate exists.
Second, we must determine whether the dispute is within the
scope of the agreement.

Pisano v. Extendicare Homes, Inc., 77 A.3d 651, 654-55 (Pa. Super.

2013). Our scope of review is plenary. McNulty v. H&R Block, Inc., 843

A.2d 1267, 1269 (Pa. Super. 2004), abrogated on other grounds by, AT&T

Mobility, LLC v. Concepcion, 131 S. Ct. 1740 (2011).

This appeal concerns solely the validity of the Arbitration Agreement,

i.e., the first part of the two-part test. ManorCare contends that H. Randall

Wisler had the legal authority to sign the Arbitration Agreement on

Decedent’s behalf. It also argues that the trial court erred in failing to

recognize an unfavorable inference against Executors because they did not

produce the written power of attorney. Finally, ManorCare argues that the

Arbitration Agreement does not unlawfully deprive Decedent of his

constitutional right to trial by jury.

Executors respond that ManorCare failed to establish that H. Randall

Wisler had authority to execute the Arbitration Agreement for Decedent.

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J-A18026-15

They provide alternative arguments in favor of affirmance. Executors

contend the Arbitration Agreement is unconscionable. They also argue it is

unenforceable, because the Arbitration Agreement provides that it is

governed by the code of the National Arbitration Forum (NAF), which no

longer performs such arbitrations.6

“[A] party ‘can be compelled to arbitrate under an agreement, even if

he or she did not sign that agreement, if common-law principles of agency

and contract support such an obligation on his or her part.’” Array

Healthcare Facilities Solutions, Inc. v. Pesce, 2 Pa. D. & C.5th 547, 566

(C.P. Phila. 2006) (quoting Bouriez v. Carnegie Mellon Univ., 359 F.3d

292, 294 (3d Cir. 2004)), aff’d, 931 A.2d 60 (Pa. Super. 2007) (unpublished

memorandum). Agency is a relationship whereby the principal manifests

assent that another person (the agent) will act on the principal’s behalf

subject to the principal’s control, and the agent agrees to do so. See Basile

v. H&R Block, Inc., 761 A.2d 1115, 1120 (Pa. 2000). “An agency

relationship may be created by any of the following: (1) express authority,

(2) implied authority, (3) apparent authority, and/or (4) authority by

estoppel.” Walton, 66 A.3d at 786. Agency cannot be inferred from mere
____________________________________________

6
In Stewart v. GGNSC-Canonsburg, LP, 9 A.3d 215, 222 (Pa. Super.
2010), we invalidated a pre-dispute nursing home arbitration agreement
because of the NAF’s unavailability. Our Supreme Court is currently
considering whether to overrule or reaffirm Stewart. See Wert v.
ManorCare of Carlisle, PA, LLC, 95 A.3d 268, 268-69 (Pa. 2014) (per
curiam order granting allowance of appeal).

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J-A18026-15

relationships or family ties, and we do not assume agency merely because

one person acts on behalf of another. Id. at 787 (quoting Sidle v.

Kaufman, 29 A.2d 77, 81 (Pa. 1942)). Rather, we look to facts to

determine whether the principal expressly or impliedly intended to create an

agency relationship. Id. To that end, family ties may be relevant when

considered with other factors evincing agency. Sidel, 29 A.2d at 81.

Finally, the party asserting the agency relationship bears the burden of

proving it by a preponderance of the evidence. Walton, 66 A.3d at 786.

“Express authority exists where the principal deliberately and

specifically grants authority to the agent as to certain matters.” Walton, 66

A.3d at 786 (citing Bolus v. United Penn Bank, 525 A.2d 1215 (Pa. Super.

1987)). An agent with express authority also acquires implied authority,

which “exists in situations where the agent’s actions are ‘proper, usual and

necessary’ to carry out express agency.” Id. (quoting Passarelli v.

Shields, 156 A.2d 343, 347 (Pa. Super. 1959)). A valid, durable power of

attorney constitutes a grant of express authority per its terms. See 20

Pa.C.S.A. § 5601(a).

A party who deals with an agent must “take notice of the nature and

extent of the authority conferred. Parties are bound at their own peril to

notice limitations upon the grant of authority before them, whether such

limitations are prescribed by the grant’s own terms or by construction of

law.” Fierst v. Cmwlth. Land Title Ins. Co., 451 A.2d 674, 677 (Pa.

1982). “If a person dealing with an agent has notice that the agent’s

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authority is created or described in a writing which is intended for his

inspection, he is affected by limitations upon the authority contained in the

writing, unless misled by conduct of the principal.” Restatement (Second) of

Agency § 167 (1958).

We hold the trial court did not err in finding that H. Randall Wisler

lacked express authority to sign the Arbitration Agreement on Decedent’s

behalf. As noted by the trial court, ManorCare had a duty to ascertain the

nature and extent of the written power of attorney. See Trial Court Opinion,

6/27/14, at 10-11 (internal citations omitted). The law required ManorCare

to determine the extent of H. Randall Wisler’s purported authority as

Decedent’s agent at the time of reliance. ManorCare failed to do so at its

peril.

Additionally, to the extent that the power of attorney granted

H. Randall Wisler the ability to sign admissions paperwork for Decedent,

nothing indicates that it also allowed him to waive litigation rights in favor of

arbitration. As the trial court noted, the authority to consent to medical

treatment and care on behalf of a principal does not necessarily entail the

authority to consent to arbitration, agreement to which was not a

precondition to be admitted to ManorCare Lancaster. See id. at 9 & n.1.

Northern Health Facilities v. Batz, 993 F.Supp.2d 485 (M.D. Pa.

2014), cited by ManorCare, is distinguishable. In that case, the patient

admitted to the nursing home was blind, he was present during the intake

interview, and he told the intake nurse that his wife, who was also present,

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could sign the admissions paperwork on his behalf. Id. at 489-90.

Moreover, these facts were undisputed during litigation. Id. Here, there is

no clear, express grant of authority from Decedent to H. Randall Wisler. Nor

do Executors stipulate to the facts supporting agency. Additionally, we have

refused to rely on Batz’s ultimate holding, because the Batz court did not

rely on Pennsylvania law. See Taylor v. Extendicare Health Facilities,

Inc., 113 A.3d 317, 327 (Pa. Super. 2015).

We next consider whether H. Randall Wisler had apparent authority to

sign the Arbitration Agreement. “Apparent agency exists where the

principal, by word or conduct, causes people with whom the alleged agent

deals to believe that the principal has granted the agent authority to act.”

Walton, 66 A.3d at 786 (citing Turner Hydraulics v. Susquehanna

Constr. Co., 606 A.2d 532 (Pa. Super. 1992)). “An agent cannot simply by

his own words, invest himself with apparent authority. Such authority

emanates from the action of the principal and not the agent.” Id. at 787

(quotation omitted).

The trial court did not abuse its discretion in concluding that

ManorCare failed to prove H. Randall Wisler acted under apparent authority

in signing the Arbitration Agreement. We adopt the trial court’s cogent

analysis:

There is no evidence presented of any manifestation by the
[D]ecedent to [ManorCare Lancaster] that his son was
authorized to act on his behalf in signing the [A]rbitration
[A]greements. Indeed, [ManorCare’s] argument focuses on the
actions of the son, the purported agent, in attempting to

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establish apparent authority. [ManorCare’s] contention that, in
deposition testimony three years after the fact, H. Randall Wisler
“conceded that he had [the] authority” to sign the admissions
paperwork and that he “noted various other examples of having
acted on behalf of his father pursuant to his [power of attorney],
such as being involved in previous hospital admissions, doing his
banking, and paying his bills” is meritless. Again, authority
emanates from the principal’s action[,] and not the agent’s.
Thus, even if H. Randall Wisler did inform staff at [ManorCare
Lancaster] that he had a power of attorney for his father and
that he had the authority to sign documents on his father’s
behalf, no[ ]one obtained a copy of the power of attorney or
confirmed with Decedent whether [H. Randall] Wisler, in fact,
had such authority and if it extended to signing a waiver of his
constitutional right to a jury trial. [ManorCare] can point to no
word or action by the purported principal that led [it] to believe
that [Decedent] had granted [H. Randall Wisler] the authority to
sign any papers on his behalf.

Here, the [D]ecedent was not present during the admission
process, and [ManorCare Lancaster’s] admissions coordinator,
Shawn Kroeck, has no recollection of the [D]ecedent’s admission
and, thus, can offer no testimony of any alleged agency
relationship created between the [D]ecedent and his son, H.
Randall Wisler, upon which Mr. Kroeck relied when presenting
the admissions paperwork and the arbitration agreements at
issue.

Trial Court Opinion, 6/27/14, at 10-11 (internal citations omitted) (emphasis

added).

We also reject as unavailing ManorCare’s argument in favor of

authority by estoppel. “Authority by estoppel occurs when the principal fails

to take reasonable steps to disavow the third party of [his or her belief] that

the purported agent was authorized to act on behalf of the principal.”

Walton, 66 A.3d at 786 (citing Turnway Corp. v. Soffer, 336 A.2d 871

(Pa. 1975)). Again, we adopt the trial court’s analysis:

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There is no authority by estoppel[,] because [ManorCare] offered
no evidence the [D]ecedent was negligent in failing to take
reasonable steps to disavow [ManorCare Lancaster] of its belief
that H. Randall Wisler was authorized to act on his behalf.
[ManorCare] offered no evidence showing the [D]ecedent knew
of the [A]rbitration [A]greement[], authorized his son to sign the
[A]greement[], or otherwise agreed to arbitrate any disputes
with [ManorCare Lancaster].

The [D]ecedent was not even present during the admission
process; thus, [ManorCare] offered no evidence whatsoever of
the [D]ecedent’s conduct when the agreements were executed.
Nor did [ManorCare] offer any evidence of the [D]ecedent’s
condition at [ManorCare Lancaster] after the [A]greements were
signed by his son. [ManorCare Lancaster] neither presented the
[A]rbitration [A]greement[] to the [D]ecedent at a later time for
his ratification[,] nor did it provide him with copies of the
[A]greements signed by his son.

Trial Court Opinion, 6/27/14, at 11-12.

ManorCare argues that H. Randall Wisler admitted his authority as

agent at his deposition, and that “admission” is dispositive. See Appellants’

Brief at 16 (citing Pa.R.E. 803(25)). This argument begs the question,

because ManorCare assumes that H. Randall Wisler’s testimony is controlling

as an admission. We fail to see how Pa.R.E. 803(25) applies here.7
____________________________________________

7
Rule 803(25) provides:

The following are not excluded by the rule against hearsay,
regardless of whether the declarant is available as a witness:

***

(25) An Opposing Party’s Statement. The statement is
offered against an opposing party and:

(A) was made by the party in an individual or
representative capacity;
(Footnote Continued Next Page)

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Executors do not argue that that H. Randall Wisler’s testimony is

inadmissible hearsay. ManorCare fails to address how the actions of

H. Randall Wisler—the purported agent—bind Decedent—the purported

principal. “An agent cannot simply, by his or her own words, invest himself

or herself with apparent authority; but rather, such authority emanates from

the principal’s action and not the agent’s.” V-Tech Servs., Inc. v. Street,

72 A.3d 270, 279 (Pa. Super. 2013) (citing Turnway Corp. v. Soffer, 336

A.2d 871 (Pa. 1975)) (emphasis added).

We reject ManorCare’s intentional spoliation and adverse-inference

arguments as non-sequiturs.8 ManorCare does not argue for a permissive

adverse inference. Rather it contends the trial court should have

concluded—from the absence of evidence—that ManorCare met its burden

_______________________
(Footnote Continued)

(B) is one the party manifested that it adopted or believed
to be true;

(C) was made by a person whom the party authorized to
make a statement on the subject;

(D) was made by the party’s agent or employee on a
matter within the scope of that relationship and while it
existed; or

(E) was made by the party’s coconspirator during and in
furtherance of the conspiracy.

Pa.R.E. 803(25).
8
Executors incorrectly contend ManorCare failed to raise this argument
before the trial court. ManorCare did so in it supplemental brief in support
of its preliminary objections.

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of proof. See Appellants’ Brief at 22 (arguing that the trial court should

have concluded that the power of attorney would have authorized H. Randall

Wisler to execute the Arbitration Agreement). Additionally, ManorCare

incorrectly characterizes its proposed adverse inference as mandatory. See

id. at 10, 22.

Adverse inferences are merely permissive. “The failure to produce

evidence raises a permissible inference, not a mandatory inference or a

presumption.” 1 PACKEL & POULIN ON PENNSYLVANIA EVIDENCE § 427 (4th ed.

2014). As our Supreme Court long ago stated:

Where evidence which would properly be part of a case is within
the control of the party whose interest it would naturally be to
produce it, and, without satisfactory explanation, he fails to do
so, the jury may draw an inference that it would be unfavorable
to him. It is an inference of fact, not a presumption of law.

Hall v. Vanderpool, 26 A. 1069, 1071 (Pa. 1893); see also Pa. Sugg.

Stand. Jury Instr. (Civ.) §§ 5.30, 5.60 (stating that the jury may take

inference against a party who failed to produce, or intentionally withheld,

relevant evidence); BINDER ON PENNSYLVANIA EVIDENCE § 3.18 (8th ed. 2014)

(“The adverse presumption (inference) resulting from . . . spoliation of

evidence shifts neither the burden of production, nor the burden of

persuasion, on the issue of liability to be resolved by the trier of fact.”). In

other words, adverse inferences are not evidence. See Kennett Square

Specialties v. Workers’ Comp. Appeal Bd. (Cruz), 31 A.3d 325, 328-29

(Pa. Cmwlth. 2011) (“The reason that an adverse inference cannot serve as

substantial evidence to support a finding of fact is because an adverse

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inference does not constitute evidence, period.”), aff'd, 99 A.3d 397 (Pa.

2014). Here, ManorCare would have a court conclude—from the absence of

evidence—that it met its burden of proving that H. Randall Wisler had the

authority to sign the Arbitration Agreement for Decedent. Understandably,

we decline to find trial court error on this basis.

ManorCare further contends that not taking an adverse inference sets

a dangerous precedent by encouraging litigants not to cooperate in

discovery,9 or to destroy valid powers of attorney to escape contractual

obligations. We disagree. If a third party relies on an agent’s authority, it

must ascertain the scope of that authority at the time of reliance. See

Fierst, 451 A.2d at 677; Restatement (Second) of Agency § 167 (1958).

The third party that fails to do so acts at its own peril. In other words, our

decision should encourage parties seeking an agreement to arbitrate to

ascertain the source of an agent’s authority before allowing the agent to sign

an arbitration agreement on the principal’s behalf.

____________________________________________

9
ManorCare never filed a motion to compel production of the power of
attorney and, consequently, never sought discovery sanctions. Cf. Pa.R.C.P.
No. 4019(a)(1)(vii). Although it apparently requested H. Randall Wisler to
bring with him a copy of the power of attorney to his deposition under Rule
4007.1(d)(1), it did not explore in detail what happened to the power of
attorney. See Defendants’ Supplemental Memorandum of Law in Support of
Preliminary Objections of Defendants to Plaintiffs’ Complaint, 6/13/13,
Exhibit B, Deposition of H. Randall Wisler, 5/23/13, at 14-17.

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We hold the trial court did not err in refusing to compel arbitration.

Therefore, we need not consider alternative grounds in favor of affirmance.

The order overruling ManorCare’s request to compel arbitration is affirmed.

Order affirmed. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/8/2015

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