Lp Louisville Lynn Way, LLC D/B/A Signature Healthcare at Jefferson Manor Rehab & Wellness Center v. Albert Ray Woford, as the of the Estate of Betty Ann Woford
RENDERED: APRIL 19, 2024; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2023-CA-0099-MR
LP LOUISVILLE LYNN WAY, LLC
D/B/A SIGNATURE HEALTHCARE
AT JEFFERSON MANOR REHAB &
WELLNESS CENTER; AMY BROWN,
NAMED IN HER CAPACITY AS
ADMINISTRATOR OF SIGNATURE
HEALTHCARE AT JEFFERSON
MANOR REHAB AND WELLNESS;
ASBR HOLDINGS, LLC; JJLA, LLC;
LAS PALMAS SNF, LLC; LP
MANAGER, LLC; LPMM, INC.;
LPSNF, LLC; SHC KY HOLDINGS,
LLC; SHC LP HOLDINGS, LLC;
SIGNATURE HEALTHCARE
CLINICAL CONSULTING
SERVICES, LLC; SIGNATURE
HEALTHCARE CONSULTING
SERVICES, LLC; SIGNATURE
HEALTHCARE, LLC; AND
STAKEHOLDER PAYROLL
SERVICES, LLC APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE A. C. MCKAY CHAUVIN, JUDGE
ACTION NO. 22-CI-001542
ALBERT RAY WOFORD, AS THE
EXECUTOR OF THE ESTATE OF
BETTY ANN WOFORD; IRA
SMEDRA; JACOB WINTNER; NEW
JEFFERSON MANOR REALTY, LLC;
THE ARBA GROUP, INC.; AND
WHEATEN, LLC APPELLEES
OPINION
AFFIRMING IN PART,
REVERSING IN PART,
AND REMANDING
** ** ** ** **
BEFORE: ACREE, KAREM, AND LAMBERT, JUDGES.
LAMBERT, JUDGE: Appellants, collectively referred to as “Signature” herein,
appeal from the Jefferson Circuit Court’s December 28, 2022, order denying their
motion to compel arbitration and stay the proceedings. After careful review of the
briefs, record, and law, we affirm in part, reverse in part, and remand for additional
proceedings.
BACKGROUND FACTS AND PROCEDURAL HISTORY
On February 20, 2008, Betty Woford executed a power of attorney
(“POA”), naming her son Albert Ray Woford as her attorney-in-fact. Betty’s POA
states as follows:
I, Betty A. Woford, . . . hereby nominate, constitute and
appoint Albert R. Woford . . . my attorney[]-in-fact, with
full power for me and in my name and stead, to make
contracts, leases, sell or convey any real estate or
personal property that I may now or hereafter own, to
receive and receipt for any money which may now or
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hereafter be due to me, to retain and release all liens on
real or personal property, to draw, make and reinvest my
money for me, to institute or defend suits concerning my
property or rights and generally to do and perform for me
in my name all that I might do if present.
On April 20, 2021, Betty was admitted as a resident to Signature
Healthcare at Jefferson Manor Rehab & Wellness Center. The following day, after
initialing a statement that Betty had “signed a written document allowing [him] to
make decisions for [her] (e.g., POA, health care surrogate, living will)” and that a
copy was provided to the facility, Albert signed a voluntary “AGREEMENT TO
INFORMALLY RESOLVE AND ARBITRATE ALL DISPUTES.” The signature
line was entitled “Resident’s Authorized Representative/ Individual* Signature,”
and, directly below, “*Representative understands and agrees s/he is signing in
both representative and individual capacities and that this agreement binds
Representative, as well as Resident.”
On March 30, 2022, Albert, as the executor of Betty’s estate, initiated
the underlying suit against Signature alleging wrongful death and multiple claims
of negligence. Importantly, while Kentucky Revised Statutes (“KRS”) 411.130
mandates that wrongful death claims shall be filed by the personal representative
of the deceased, the deceased’s beneficiaries are the real parties in interest. Ping v.
Beverly Enters., Inc., 376 S.W.3d 581, 597-600 (Ky. 2012).
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Signature moved the court to stay the proceedings and compel
arbitration on the estate’s negligence claims, Albert’s individual wrongful death
claim as Betty’s beneficiary, and, arguing for a modification of current Kentucky
law, any other beneficiaries’1 wrongful death claims. In support of the motion,
Signature attached copies of the signed arbitration agreement and Betty’s POA.
Albert opposed the motion, arguing that no valid arbitration agreement existed
because he lacked the authority to bind Betty or other unvested wrongful death
beneficiaries. Albert did acknowledge, however, that he “may have had the
ability” to bind his own claim.
Finding that Betty’s POA did not authorize Albert to make health care
decisions and that the arbitration agreement was not compulsory for her admission
to Signature’s facility, the court concluded that Albert “did not have the requisite
authority under the POA to waive, where there was no reasonable necessity to do
so, his mother’s right of access to the courts.” The court accordingly denied
Signature’s motion to compel arbitration. The order did not address whether
Albert’s individual claim was subject to arbitration. This appeal followed.
STANDARD OF REVIEW
Pursuant to the Kentucky Uniform Arbitration Act (“KUAA”), KRS
417.050 et seq., and the Federal Arbitration Act (“FAA”), 9 United States Code
1
Excepting Albert, the record contains no information concerning Betty’s possible beneficiaries.
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(“U.S.C.”) §§ 1 et seq., a valid pre-dispute agreement between parties to submit to
arbitration is enforceable as written. An order denying arbitration is immediately
appealable. KRS 417.220(1). We review a court’s decision on arbitration,
“according to usual appellate standards. [KRS 417.220(2).] That is, we defer to
the trial court’s factual findings, upsetting them only if clearly erroneous or if
unsupported by substantial evidence, but we review without deference the trial
court’s identification and application of legal principles.” Conseco Fin. Servicing
Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky. App. 2001).
ANALYSIS
We begin with the question of whether Betty was bound by the
arbitration agreement Albert signed. As a preliminary issue, Albert asserts that,
regardless of the fact that he was Betty’s attorney-in-fact, he did not sign the
arbitration agreement in that capacity and, therefore, Betty was not a party to the
contract. Albert asserts that Kindred Nursing Centers Limited Partnership v.
Butler, No. 2013-CA-000880-MR, 2014 WL 3722083 (Ky. App. Jul. 25, 2014),2
presenting analogous facts, supports his claim. Signature disputes Albert’s
2
Citation to unpublished opinions is permitted by Kentucky Rule of Appellate Procedure 41 as
persuasive authority if “there is no published opinion of the Supreme Court or the Court of
Appeals that would adequately address the point of law argued by the party[.]” Because this
Court in Cambridge Place Group, LLC v. Mundy, 617 S.W.3d 838, 841 (Ky. App. 2021),
adopted the analysis of Butler under analogous facts, Albert’s citation to Butler is contrary to the
rules. However, as the result is the same, we have addressed the merits of his claim.
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characterization of his signing capacity and argues that Butler is neither relevant
nor controlling. We agree with Signature.
In Butler, the issue was whether an agreement to arbitrate signed by
the principal’s attorney-in-fact was valid when he affirmatively avowed therein
that he was signing as Butler’s son, a capacity that does not encompass the
necessary authority. Id. at *4-5. A panel of this Court affirmed the holding that no
valid arbitration agreement existed, reasoning that, absent an indication of the
capacity under which a signature was executed, the parties were bound by the
capacity in which the agreement was signed. Id. at *5-6 (see also Mundy, 617
S.W.3d at 841).
The facts in the present case are distinguishable from Butler and
Mundy, as the agreement herein dictated in clear and express terms that Albert was
signing in both representative and individual capacities and he made no affirmative
statement otherwise. Additionally, faced with an identical signature line, the
Supreme Court of Kentucky has addressed the converse argument, that the signee
was acting solely in his representative capacity, and decided that the signatory,
having reasonable notice of the terms of the contract, had likewise assented to
arbitration in his individual capacity. LP Louisville E., LLC v. Patton, 651 S.W.3d
759, 774-75 (Ky. 2020). Consequently, we conclude that Albert’s argument that
he did not sign the arbitration agreement as Betty’s representative is without merit.
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We turn now to the primary issue on appeal, which is whether the
court properly concluded that no valid arbitration agreement existed. The parties
dispute which of them bore the burden of proof. As the party seeking to compel
arbitration, Signature concedes it had the initial burden of establishing a valid
agreement. Ping, 376 S.W.3d at 590. However, citing Louisville Peterbilt, Inc. v.
Cox, Signature argues that the submission of the agreement signed by Albert and
Betty’s POA authorizing him to act on her behalf satisfied its obligation and that
the burden had therefore shifted to Albert for rebuttal. 132 S.W.3d 850, 857 (Ky.
2004). Albert, however, maintains that Signature was required to prove he had
actual authority to execute the agreement.
Both the KUAA and the FAA require that the existence of a valid
arbitration agreement must be established before arbitration can be compelled.
Ping, 376 S.W.3d at 590. “[T]he existence of the agreement depends on state law
rules of contract formation.” Id. For a contract to be valid and enforceable, there
must be voluntary and complete assent by parties having the capacity to contract.
Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306, 321 (Ky. 2015), rev’d in
part, vacated in part by Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 581 U.S. 246,
137 S. Ct. 1421, 197 L. Ed. 2d 806 (2017). An attorney-in-fact can assent on the
principal’s behalf only if the POA instrument confers the authority to do so. Id.
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Because legally effective assent is required for the arbitration agreement to be
valid, we agree with Albert that Signature bore the burden of proof.
Regarding the court’s determination that Betty’s POA did not
authorize Albert to execute the arbitration agreement, Signature contends that the
court misapplied the holding in Ping and reached an erroneous conclusion. We
agree; however, as we are permitted to affirm for any reason in the record, Fischer
v. Fischer, 348 S.W.3d 582, 591-92 (Ky. 2011), abrogated on other grounds by
Nami Res. Co., L.L.C. v. Asher Land & Min., Ltd., 554 S.W.3d 323 (Ky. 2018), we
shall consider the merits of the parties’ arguments.
Signature asserts that the provisions of Betty’s POA granting Albert,
as her attorney-in-fact, the unqualified authority to specifically “make contracts”
and “institute or defend suits concerning [her] property or rights[,]” as well as the
universal grant of authority to “generally do and perform . . . all that [she] might do
if present[,]” necessarily includes the power to execute the arbitration agreement.
Albert disputes this broad interpretation of his authority and argues that the circuit
court should be affirmed.
In Ping, the Kentucky Supreme Court set forth the following guidance
on the construction of a POA:
The scope of [authority is] left to the principal to declare,
and generally that declaration must be express. In Rice
[v. Floyd, 768 S.W.2d 57, 59 (Ky. 1989)], this Court
explained that even a “comprehensive” durable power
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would not be understood as implicitly authorizing all the
decisions a guardian might make on behalf of a ward.
Rather, we have indicated that an agent’s authority under
a power of attorney is to be construed with reference to
the types of transaction expressly authorized in the
document and subject always to the agent’s duty to act
with the “utmost good faith.” Wabner [v. Black, 7
S.W.3d 379, 381 (Ky. 1999)]. This is consistent with
section 37 of the Restatement (Second) of Agency, which
provides that[:]
(1) Unless otherwise agreed, general expressions
used in authorizing an agent are limited in
application to acts done in connection with the act
or business to which the authority primarily
relates.
(2) The specific authorization of particular acts
tends to show that a more general authority is not
intended.
. . . “Unless otherwise agreed, authority to conduct a
transaction includes authority to do acts which are
incidental to it, usually accompany it, or are reasonably
necessary to accomplish it.” Restatement (Second) of
Agency § 35 (1958). . . . [It is a] fundamental rule that a
written agreement generally will be construed “as a
whole, giving effect to all parts and every word in it if
possible.” City of Louisa v. Newland, 705 S.W.2d 916,
919 (Ky. 1986).
376 S.W.3d at 592. Applying these principles, we will address Signature’s
arguments.
First, because the POA identifies specific acts, we must reject
Signature’s contention that Albert had unfettered authority to “generally do and
perform” as Betty herself could since it would render those provisions
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meaningless. Instead, we read this general expression of authority as well as
Albert’s ability to “make contracts” in the context of the type of transactions or
business to which the POA primarily relates. A review of the terms of Betty’s
POA demonstrates a primary purpose of permitting Albert to manage her property
and her financial affairs. Therefore, to be authorized, the arbitration agreement
must be incidental or reasonably necessary to accomplish those purposes, and
Kentucky courts have repeatedly held that a pre-dispute arbitration agreement
waiving the principal’s constitutional rights does not fall within this authority. Id.;
Whisman, 478 S.W.3d at 324-25; Kindred Nursing Ctrs. Ltd. P’ship v. Wellner,
533 S.W.3d 189, 194 (Ky. 2017).
Finally, directly refuting Signature’s argument, our Supreme Court
has held that a pre-dispute arbitration contract is beyond the remit of a provision
authorizing an attorney-in-fact to institute or defend suits concerning the
principal’s property or rights. Whisman, 478 S.W.3d at 322-24; see also Wellner,
533 S.W.3d at 193. The Court explained in Whisman that, “[i]nstituting ‘suits
concerning my property rights’ is not practically or conceptually similar in any
way to making an agreement that future claims will be taken to arbitration[,]” that
the term “suits” denotes an action in a court of law which “arbitration by its very
purpose and design . . . is the antithesis of[,]” and that the agreement “was not
‘incidental’ to or ‘reasonably necessary’ to the institution or defense of a ‘suit’
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concerning [the principal’s] property rights.” 478 S.W.3d at 323-24. Accordingly,
the court was correct that Albert was not authorized to execute the arbitration
agreement as Betty’s representative.
In reaching our conclusion, we have considered Signature’s argument
that reliance on Whisman and Ping is misplaced given more recent decisions.
Whisman was one of three actions that the Supreme Court of Kentucky
consolidated into a single opinion addressing an attorney-in-fact’s authority to
execute a pre-dispute arbitration agreement.3 In all three cases, the Court
concluded that the agreement was unauthorized by the relevant POA. Whisman
became final, but the Appellants in the remaining two actions, Kindred Nursing
Centers Ltd. Partnership v. Clark, No. 2013-SC-000426-I (Clark 1), and Kindred
Nursing Centers Ltd. Partnership v. Wellner, No. 2013-SC-000431-I (Wellner 1),
sought a writ and were granted certiorari. Kindred Nursing Ctrs. Ltd. P’ship v.
Clark, 581 U.S. 246, 137 S. Ct. 1421.
On review, the United States Supreme Court concluded that
Kentucky’s adoption of the clear statement rule, requiring that the authority to
execute a pre-dispute arbitration agreement must be expressly stated in a POA,
impinged upon the supremacy of the FAA. Id. As the ruling in Clark 1 turned
exclusively on the clear statement rule, it was reversed. Id. Wellner 1 also applied
3
No. 2013-SC-000426-I.
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the ill-fated rule, but the case was additionally decided on alternative grounds that
the POA was not sufficiently broad to authorize the arbitration agreement. Id. at
256, 256 S. Ct. at 1429. The United States Supreme Court held that, “[i]f that
interpretation of the document is wholly independent of the court’s clear-statement
rule, then nothing we have said disturbs it[,]” and the case was remanded for the
Supreme Court of Kentucky to make this determination. Id. On remand, citing
favorably its analysis of the Whisman POA, the Court reaffirmed its conclusion
that the Wellner POA did not authorize the pre-dispute arbitration agreement.
Wellner, 533 S.W.3d at 194. Hence, the holdings of Whisman on which we have
relied remain good law.
Regarding Ping, Signature asserts that a panel of this Court in L.P.
Pikeville, LLC v. Smith, No. 2017-CA-000807-MR, 2018 WL 1980752 (Ky. App.
Apr. 27, 2018), “held that Ping was not controlling and rejected the contention that
the [POA] was limited to decisions about finances and property[.]” Contrary to
what Signature implies, Smith did not hold that Ping articulated an incorrect
statement of the law; rather, Smith involved readily distinguishable facts that
justified reaching a contrary result. Id. at *6-7. Ping has not been overturned, and
the Supreme Court of Kentucky has continued to cite it as authoritative. See
Patton, 651 S.W.3d at 768-71.
As to whether Betty’s beneficiaries are compelled to arbitrate, having
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determined that Albert was not authorized to execute the agreement on Betty’s
behalf, it necessarily follows that he was likewise unable to bind her beneficiaries,
and Signature’s arguments pertaining thereto are moot. Thus, we affirm the
court’s denial of Signature’s motion to compel arbitration on the claims brought on
behalf of Betty and her unnamed beneficiaries.
However, given Albert’s admission that he executed the arbitration
agreement in a non-representative capacity, we must reverse the order as it pertains
to his wrongful death claim. Although the parties have briefed whether the court
proceedings should be stayed pending arbitration on Albert’s individual claim, we
remand this determination to the circuit court.
CONCLUSION
For the foregoing reasons, the order of the Jefferson Circuit Court is
affirmed in part, reversed in part, and remanded for further proceedings consistent
with this Opinion.
ALL CONCUR.
BRIEFS FOR APPELLANTS: BRIEF FOR APPELLEE ALBERT
RAY WOFORD, AS THE
Kif H. Skidmore EXECUTOR OF THE ESTATE OF
Benjamin M. Fiechter BETTY ANN WOFORD:
Lexington, Kentucky
Lisa E. Circeo
Richard E. Circeo
Lexington, Kentucky
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