J-A31009-15
2017 PA Super 26
MARY P. PETERSEN, BY AND THROUGH IN THE SUPERIOR COURT OF
HER ATTORNEY-IN-FACT, KATHLEEN F. PENNSYLVANIA
MORRISON
Appellee
v.
KINDRED HEALTHCARE, INC., AND
PERSONACARE OF READING, INC.,
D/B/A KINDRED TRANSITIONAL CARE
AND REHABILITATION-WYOMISSING,
AND KINDRED NURSING CENTERS EAST,
LLC, AND KINDRED HEALTHCARE
OPERATING, INC., AND MONIQUE COLE,
NHA
Appellants No. 1567 MDA 2014
Appeal from the Order Entered September 5, 2014
In the Court of Common Pleas of Berks County
Civil Division at No(s): 12-26079
BEFORE: PANELLA, J., LAZARUS, J., and PLATT, J.*
OPINION BY LAZARUS, J.: FILED FEBRUARY 01, 2017
Kindred Healthcare, Inc., Personacare of Reading, Inc., d/b/a Kindred
Transitional Care and Rehabilitation-Wyomissing, Kindred Nursing Centers
East, LLC, Kindred Healthcare Operating, Inc., and Monique Cole, NHA
(collectively, “Kindred”), appeal from the order entered in the Court of
Common Pleas of Berks County, overruling Kindred’s preliminary objections
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*
Retired Senior Judge assigned to the Superior Court.
J-A31009-15
to the complaint filed by Mary P. Petersen, by and through her attorney-in-
fact, Kathleen F. Morrison (“Petersen”). Upon careful review, we affirm.
This action involves claims of negligence on the part of Kindred in
relation to care rendered to Petersen during her stay as a patient at a
Kindred facility. Petersen filed a complaint on July 5, 2013. Kindred filed
preliminary objections on July 26, 2013, seeking, inter alia, to enforce an
arbitration agreement signed by Petersen’s daughter, Darlene Uriarte,
pursuant to a power of attorney (“POA”) appointing Uriarte as successor
agent in the event her sister, Kathleen Morrison, was unwilling or unable to
act. Petersen filed a response, in which she asserted that the agreement
was “unenforceable, void, unconscionable, and/or a contract of adhesion.”
Plaintiff’s Answer to Preliminary Objections, 8/15/13, at 3. Petersen also
claimed that the agreement “was signed under duress or by someone
without proper legal authority.” Id. The parties engaged in limited
discovery on the issue of arbitration and filed supplemental briefs. Following
oral argument, the trial court issued an order on September 8, 2013,
overruling Kindred’s preliminary objections and directing Kindred to file a
response to Petersen’s complaint.
This timely appeal follows,1 in which Kindred raises the following issues
for our review:2
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1
An order overruling preliminary objections seeking to compel arbitration is
immediately appealable as an interlocutory appeal as of right pursuant to 42
(Footnote Continued Next Page)
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1. Whether the [t]rial [c]ourt erred in overruling Kindred’s
preliminary objections seeking to enforce an [a]lternative
[d]ispute [r]esolution [a]greement signed by [Petersen’s]
daughter, Darlene Uriarte, as she had authority to execute the
ADR [a]greement pursuant to a written [p]ower of [a]ttorney?
2. Whether the [t]rial [c]ourt erred by failing to conclude that
Ms. Uriarte had the capacity, and, in fact, did have a basic
understanding of alternative dispute resolution when she signed
the [a]greement?
3. [Whether t]he [t]rial [c]ourt erred in failing to conclude that
by signing various other medical-legal documents on behalf of
her mother during her stay at the Kindred facility that [Petersen]
is estopped from disavowing the ADR [a]greement?
4. Whether the [t]rial [c]ourt erred in failing to apply the
policies favoring arbitration contained in the Federal Arbitration
Act, 9 U.S.C. §§ 1-16 (“FAA”), the Pennsylvania Uniform
Arbitration Act (“PUAA”),[3] and extensive case law interpreting
same?
Brief of Appellants, at 4.
We begin by noting that our review of a claim that the trial court
improperly denied 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. Gaffer, 936 A.2d at 1112. As contract
interpretation is a question of law, our review of the trial court’s decision is
_______________________
(Footnote Continued)
Pa.C.S.A. § 7320(a) and Pa.R.A.P. 311(a)(8). See Gaffer Ins. Co., Ltd. v.
Discover Reinsurance Co., 936 A.2d 1109, 1110 n.2 (Pa. Super. 2007).
2
We have renumbered Kindred’s issues for ease of disposition.
3
42 Pa.C.S.A. §§ 7301-7320.
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de novo and our scope is plenary. Id., citing Bucks Orthopaedic Surgery
Associates, P.C. v. Ruth, 925 A.2d 868, 871 (Pa. Super. 2007).
Kindred first claims that the trial court erred in concluding that
Petersen’s daughter, Darlene Uriarte, lacked authority to execute the
arbitration agreement pursuant to Petersen’s power of attorney.
Specifically, Kindred challenges the court’s findings that: (1) as the named
successor agent, Uriarte did not have authority to act on behalf of Petersen
until it was determined that the primary agent, Kathleen, was unable or
unwilling to act; and (2) the power of attorney document in question did not
authorize the agent to enter into ADR agreements on behalf of the principal.
We first address the question of whether Uriarte possessed the
authority to act on Petersen’s behalf under the POA. Kindred asserts that
the trial court erred in concluding that “before Darlene Uriarte could validly
execute the ADR agreement, there must first have been a specific finding
that her sister, Kathleen, was unwilling or unable to sign [it].” Brief of
Appellants, at 23. Kindred argues that Uriarte’s deposition testimony
demonstrates that she and Kathleen agreed that she (Uriarte) had the
authority to execute the documents necessary to admit Petersen into
Kindred’s facility. Kindred asserts that Uriarte “presented the POA to
Kindred, and represented herself as having authority to act” on Petersen’s
behalf. Kindred claims that “the [t]rial [c]ourt’s decision would require
[Kindred] to make an on-the-spot determination that [Kathleen] was
unwilling or unable to sign admissions papers on her [Petersen’s] behalf,
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despite there being no reason to question [Uriarte’s] authority.” Id. at 24.
Kindred also argues that, because Petersen has not repudiated any of the
other paperwork signed by Uriarte, she is essentially estopped from
disavowing the ADR agreement. Kindred is entitled to no relief.
Petersen did not execute the arbitration agreement herself. Thus, in
order for the agreement to be binding up on her, there must have existed at
the time of execution an agency relationship between Petersen and Uriarte.
Such a relationship cannot be inferred from mere relationship or family ties
unattended by conditions, acts or conduct clearly implying an agency.
Walton v. Johnson, 66 A.3d 782, 787 (Pa. Super. 2013), quoting Sidle v.
Kaufman, 29 A.2d 77, 81 (Pa. 1942). Rather, 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.
Express authority exists where the principal deliberately and
specifically grants authority to the agent as to certain matters.
Implied authority exists in situations where the agent’s actions
are “proper, usual and necessary” to carry out express agency.
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. Authority
by estoppel occurs when the principal fails to take reasonable
steps to disavow the third party of their belief that the purported
agent was authorized to act on behalf of the principal.
Id. (citations omitted). The party asserting the existence of an agency
relationship bears the burden of proving it by a fair preponderance of the
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evidence. Id., citing Volunteer Fire Co. v. Hilltop Oil Co., 602 A.2d 1348,
1351 (Pa. Super. 1992).
Moreover, a party dealing with an agent, known by the former to be
acting only under an express grant of authority (such as a power of
attorney), has a duty to take notice of the nature and extent of the authority
conferred. Fierst v. Commonwealth Land Title Ins. Co., 451 A.2d 674,
677 (Pa. 1982), citing Moore v. Luzerne County, 105 A. 94, 95 (Pa.
1918). See also Restatement (Second) of Agency, § 167 (1958) (“If a
person dealing with an agent has notice that the agent’s 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.”). 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,
451 A.2d at 677. “A person with notice of a limitation of an agent’s
authority cannot subject the principal to liability upon a transaction with the
agent if he should know that the agent is acting improperly.” Restatement
(Second) of Agency § 166 (1958). Finally, the existence of a limitation upon
the authority conferred by a power of attorney must be determined in light
of the rule that such powers are to be strictly construed. See Nuzum v.
Spriggs, 55 A.2d 402, 403 (Pa. 1947).
Here, Uriarte presented Kindred with a copy of Petersen’s power of
attorney at the time she signed the ADR agreement. By its plain language,
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the POA appointed Uriarte as agent only upon the occurrence of a specific
contingency, i.e., “[i]n the event [Petersen’s] daughter, Kathleen F.
Petersen[,] is unwilling or unable to act as . . . Attorney-In-Fact[.]” Durable
General Power of Attorney, 7/31/03, at 2. Thus, Uriarte’s authority to bind
her mother did not arise until her sister, Kathleen, became “unwilling or
unable” to act. Having received a copy of Petersen’s POA, Kindred had
actual notice that Uriarte had authority to act only based on the occurrence
of certain conditions. Yet, there is nothing in the record to suggest that
Kindred made any attempt to ascertain whether or not Kathleen was
“unwilling or unable” to act, nor does the record reflect that Kathleen was, in
fact, “unable or unwilling” to act. Kindred simply accepted Uriarte’s
representation that she possessed the requisite authority to act on behalf of
her mother, even though she was named in the document only as successor
agent. Contrary to Kindred’s assertion that there was “no reason to
question Uriarte’s authority” under the POA, in fact, Kindred had every
reason to question her authority by virtue of the fact that she was only
named successor agent in the document. In short, Kindred failed in its
obligation to take notice of the nature and extent of the authority conferred
upon Uriarte by Petersen’s POA. Fierst, supra. Kindred has not
demonstrated that Kathleen was “unwilling or unable” to act at the time the
ADR agreement was signed. Accordingly, Uriarte lacked authority to bind
Petersen pursuant to the POA.
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Kindred’s agency by estoppel argument also garners it no relief.4
Kindred maintains that, since Petersen accepted the benefits flowing from
the other medical-legal documents signed by Uriarte on her behalf, i.e., the
services set forth in the admission agreement, she is now estopped from
disavowing the arbitration agreement. Kindred’s argument is both flawed
and unavailing.
Agency by estoppel occurs when the principal fails to take reasonable
steps to disavow the third party of their belief that the purported agent was
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4
Kindred appears to conflate the concepts of “agency by estoppel” and
“equitable estoppel.” Equitable estoppel applies to prevent a party from
assuming a position or asserting a right to another’s disadvantage
inconsistent with a position previously taken. Novelty Knitting Mills, Inc.
v. Siskind, 457 A.2d 502, 504 (Pa. 1983) (citation omitted). The person
inducing the belief in the existence of a certain state of facts is estopped to
deny that the state of facts does in truth exist, over a different or contrary
state of facts as existing at the same time, or deny or repudiate his acts,
conduct, or statements. Id. Kindred essentially maintains that, since
Petersen accepted the benefit flowing from the other agreements Uriarte
signed on her behalf, namely the services set forth in the admission
agreement, she is estopped to disavow the arbitration agreement simply
because she does not wish to arbitrate the instant dispute.
This Court rejected an identical argument in Washburn v. N. Health
Facilities, Inc., 121 A.3d 1008 (Pa. Super. 2015). There, we held that a
wife who signed an arbitration agreement on behalf of her husband in the
absence of a POA or other agency agreement was not equitably estopped
from disavowing the agreement. We found that, because the ADR
agreement was separate from the admission agreement, and admission was
not conditioned upon agreeing to arbitrate, the agreement was not part of
the contractual quid pro quo for admission to the facility and its attendant
benefits. Likewise, here, the arbitration agreement was separate from the
admission agreement, and was not a condition of admission to Kindred’s
facility. Thus, Washburn, is controlling as to Kindred’s estoppel argument.
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authorized to act on behalf of the principal. Id., citing Turnway Corp. v.
Soffer, 336 A.2d 871 (Pa. 1975). The doctrine requires that the principal
intentionally or carelessly caused a third party to believe an agency
relationship existed, or, knowing that the third party held such a belief, did
not take reasonable steps to clarify the facts. See Restatement (Second) of
Agency, Section 8(B). Additionally, there must be justifiable reliance by the
third party. Turnway Corp. v. Soffer, 336 A.2d 871, 876 (Pa. 1975).
To prevail on a claim of agency by estoppel on the issue of authority to
sign the ADR Agreement, Kindred must prove by a fair preponderance of the
evidence that either: (1) there was some carelessness or negligence on
Petersen’s part that allowed Kindred to rely on the POA or (2) Petersen did
not take reasonable steps, knowing that Kindred was relying on the POA, to
correct its belief. Walton, 66 A.3d at 788–89.
Here, Kindred’s argument on this issue is misplaced. While agency by
estoppel is essentially a determination of agency by after-the-fact actions by
the principal, Walton, 66 A.3d at 788, Kindred focuses its argument on the
actions of Uriarte. See Brief of Appellants, at 25 (“Manifestations were
made by the agent, Darlene Uriarte, to a third person, and [a] reasonable
belief was formed by [Kindred] that the alleged agent was authorized to bind
the principal.”). As such, its claim is fatally flawed.
In any event, Kindred offered no evidence to demonstrate that
Petersen acted negligently or had any reason to believe that Kindred was
acting upon a mistaken belief as to Uriarte’s authority – or lack thereof –
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under the POA. See Walton, supra. Petersen had no knowledge of the
circumstances surrounding the execution of the ADR agreement. She was
not present at its execution, and Uriarte did not show the ADR agreement to
her after the fact. See Darlene Uriarte Deposition, 5/7/14, at 49. Moreover,
Uriarte testified that Petersen “wouldn’t have grasped” much of what was
contained in the document. Id. at 49-50. Kindred never presented the ADR
agreement to Petersen for ratification and there is no basis to believe that
she knew or should have known about the agreement. Because it cannot be
shown that Petersen was negligent in failing to correct Kindred’s false
assumptions regarding Uriarte’s lack of authority under the POA, Kindred’s
agency by estoppel claim must fail.
For the foregoing reasons, we conclude that Uriarte lacked the
authority to execute the ADR agreement on Petersen’s behalf, and that
Petersen is not legally bound by the agreement. Having concluded that no
valid agreement to arbitrate exists, we need not address Kindred’s
remaining claims.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/1/2017
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