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Date: 08-08-2020
Case Style:
Diane Holley, Individually and as Conservator, etc. v. Silverado Senior Living Management, Inc.
Case Number: G058576
Judge: Moore, J.
Court: California Court of Appeals Fourth Appellate District, Division Three on appeal from the Superior Court, County of Orange
Plaintiff's Attorney: Alexander F. Giovanniello, Daniel F. McCann and Erik M. Bressler
Defendant's Attorney: Art Gharibian, Alexander H. Feldman and Valentina Ambarchyan
Description:
Defendants Silverado Senior Living Management, Inc., and Subtenant 350
W. Bay Street, LLC dba Silverado Senior Living – Newport Mesa (collectively Silverado
or defendants) appeal from the trial court’s order denying its petition to compel
arbitration of the complaint filed by plaintiffs Diane Holley, both individually and as
successor in interest to Elizabeth S. Holley, and James Holley (collectively the Holleys or
plaintiffs).1
Plaintiffs brought suit against defendants, who operate a senior living
facility, for elder abuse and neglect, negligence, and wrongful death, based on
defendants’ alleged substandard treatment of Elizabeth.
More than eight months after the complaint was filed, defendants moved to
arbitrate based on an arbitration agreement Diane had signed upon Elizabeth’s admission.
At the time, Diane and James were temporary conservators of Elizabeth’s person. The
court denied the motion, finding that at the time Diane signed the document, there was
insufficient evidence to demonstrate she had the authority to bind Elizabeth to the
arbitration agreement. Defendants argue this ruling was incorrect as a matter of law, and
that pursuant to the Probate Code, the agreement to arbitrate was a “health care decision”
to which a conservator had the authority to bind a conservatee, relying on a case from the
Third District Court of Appeal, Hutcheson v. Eskaton FountainWood Lodge (2017) 17
Cal.App.5th 937 (Hutcheson).
We conclude that Hutcheson and other cases on which Silverado relies are
distinguishable on the facts and relevant legal principles. When the Holleys signed the
arbitration agreement, they were temporary conservators of Elizabeth’s person, and
therefore, they lacked the power to bind Elizabeth to an agreement giving up substantial
rights without her consent or a prior adjudication of her lack of capacity. Further, as
merely temporary conservators, the Holleys were constrained, as a general matter, from
making long-term decisions without prior court approval.
1
For the ease of the reader, when necessary, we refer to the Holleys by their first names.
3
Accordingly, the trial court was correct that the arbitration agreement is
unenforceable as to Elizabeth. Further, because there was no substantial evidence that
the Holleys intended to sign the arbitration agreement on their own behalf, it cannot be
enforced against their individual claims. We therefore affirm the court’s order denying
Silverado’s motion to compel arbitration.
I
FACTS
At the time of Elizabeth’s admission to Silverado, she was 77 years old and
suffering from dementia and other medical problems. In January 2017, professional
conservators Rob Saslow and Stacey Haft were appointed temporary conservators of
Elizabeth’s estate, with an expiration date of October 25.
In August 2017, Diane and James were appointed temporary conservators
of Elizabeth’s person, but not her estate. On October 26, they signed paperwork for
Elizabeth’s admission to Silverado.
According to Diane, she was presented with “a stack of paperwork to sign
relating to my mother’s admission at Silverado . . . . [An employee] told me to sign my
name to the signature line on various forms . . . . There were a lot of forms to be signed
that day. More emphasis was given to the forms that needed information about my
mom’s needs regarding her activities of daily living as opposed to forms where she just
needed my signature. There was a great sense of urgency to the admissions process in
which I signed these numerous forms. I was told several times that beds go very quickly
at Silverado and that if I did not get all the forms signed and completed and a check
deposited, that the bed could go to someone else on the waiting list. . . . At no point did
anyone from Silverado explain to me that part of the admission paperwork contained an
arbitration agreement and that it was not a condition for my mother’s admission.”
4
Among the documents was one entitled “Resident-Community Arbitration
Agreement” (the arbitration agreement), which stated it was voluntary and not a
condition of admission. The arbitration agreement stated: “The undersigned certifies
that he/she has read this Agreement, and has been given a copy, and is either the Resident
and/or is the representative/agent of the Resident, duly authorized to execute the above
and accept its terms. [¶] *Based on the Resident’s Mental Capacity, the term Resident
may include Responsible Party, POA, Guardian and/or Conservator.”
Diane signed the arbitration agreement and James signed underneath
Diane’s name. Elizabeth did not sign the document.
On October 30, a hearing was held on Diane and James’s petition, as
temporary conservators of Elizabeth’s person, to place her at Silverado. The petition was
granted. Additionally, the court ordered Diane and James to assume the role of
conservator of both Elizabeth’s person and her estate temporarily, with an expiration date
of April 25, 2018. The court’s October 30th order gave Diane and James specific
authority to place Elizabeth in a locked facility and made the requisite findings under the
Probate Code.
Elizabeth was admitted to Silverado from November 1 until November 10,
2017. On November 4, she was transferred to Hoag Hospital after an X-ray revealed a
humeral fracture, and she returned the same day with her arm in a sling. She also
suffered a hip fracture and a number of bruises, according to the complaint. She had
surgery on November 10, and she passed away on February 10, 2018.
On January 22, 2019, James and Diane, individually, and Diane, as
Elizabeth’s successor in interest, filed the instant lawsuit, alleging elder abuse,
negligence, breach of contract, and wrongful death.
In October 2019, defendants filed the instant motion to compel arbitration.
After briefing and a hearing, the court denied the motion.
5
II
DISCUSSION
A. General Principles and Standard of Review
“California has a strong public policy in favor of arbitration as an
expeditious and cost-effective way of resolving disputes. [Citation.] Even so, parties can
only be compelled to arbitrate when they have agreed to do so. [Citation.] ‘Arbitration
. . . is a matter of consent, not coercion . . . .’ [Citation.] Whether an agreement to
arbitrate exists is a threshold issue of contract formation and state contract law.
[Citations.] The party seeking to compel arbitration bears the burden of proving the
existence of a valid arbitration agreement.” (Avila v. Southern California Specialty Care,
Inc. (2018) 20 Cal.App.5th 835, 843-844.)
With respect to the standard of review, “‘[t]here is no uniform standard of
review for evaluating an order denying a motion to compel arbitration. [Citation.] If the
court’s order is based on a decision of fact, then we adopt a substantial evidence standard.
[Citations.] Alternatively, if the court’s denial rests solely on a decision of law, then a de
novo standard of review is employed.’” (Laswell v. AG Seal Beach, LLC (2010) 189
Cal.App.4th 1399, 1406.)
When more than one reasonable inference can be drawn from the
undisputed evidence, “‘“‘the determination of whether the evidence supports one
conclusion or the other is for the trial court, and a reviewing court may not disturb such
finding if there is any substantial evidence to support it . . . .’”’” (McDermott Will &
Emery LLP v. Superior Court (2017) 10 Cal.App.5th 1083, 1102.) In that situation, “we
must ‘accept as true all evidence and all reasonable inferences from the evidence tending
to establish the correctness of the trial court’s findings and decision . . . .’” (Young v.
Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1130, fn. 6; see Baker v. Osborne
Development Corp. (2008) 159 Cal.App.4th 884, 892 [where the trial court’s
determination “turned on the resolution of conflicts in the evidence or on factual
6
inferences to be drawn from the evidence, we consider the evidence in the light most
favorable to the trial court’s ruling and review the trial court’s factual determinations
under the substantial evidence standard”].)
B. Powers Under Temporary Conservatorship of the Person
Silverado argues the trial court erroneously concluded the Holleys did not
have the authority to bind Elizabeth to the arbitration agreement.
In Hutcheson, supra, 17 Cal.App.5th 937, the decedent, Barbara
Lovenstein, appointed her niece, plaintiff Robin Hutcheson, as her attorney-in-fact under
the Health Care Decisions Law (Prob. Code, § 4671, subd. (a))2
(the health care POA), in
2006. This authority gave Hutcheson the power to make health care decisions for her,
including the admission to a medical care facility. (Hutcheson, at pp. 941-942.) In 2010,
she also executed a power of attorney (the personal care POA) pursuant to section 4000,
et seq., using the statutory form. She designated her sister, plaintiff Jean Charles, and
Hutcheson as her attorneys-in-fact. The general POA gave Charles and Hutcheson
decision-making authority in a number of areas, but did not expressly authorize anyone to
make medical and health care decisions for her. (Hutcheson, at p. 942.)
In February 2012, Charles voluntarily admitted Lovenstein to defendant
Eskaton FountainWood Lodge’s (Eskaton) facility. (Hutcheson, supra, 17 Cal.App.5th at
p. 942.) The admission agreement included an arbitration clause. Lovenstein died in
April 2012. (Id. at p. 943.) After Hutcheson and Charles sued Eskaton, Eskaton
petitioned to compel arbitration. The trial court denied the petition, and in due course the
appellate court affirmed. (Id. at pp. 941, 943.) The appellate court concluded that
Lovenstein’s admission was a “health care decision” and Charles, who co-held the
personal care POA, was not authorized to make such decisions. (Id. at pp. 945-951.)
2
All further undesignated statutory references are to the Probate Code.
7
Similarly, in Garrison v. Superior Court (2005) 132 Cal.App.4th 253, 266,
the court also found that an agreement to arbitrate was a health care decision. The court
concluded that a health care POA was sufficient to establish the validity of an arbitration
clause, concluding the arbitration clause was “part of the health care decisionmaking
process.”
Thus, Silverado argues, the Holleys “acted as [Elizabeth’s] conservators;
conservators who possessed the authority to make healthcare decisions on [Elizabeth’s]
behalf. As Conservators, Respondents were ‘responsible for the conservatee’s care and
protection . . . to arrange for the conservatee’s health care, meals, clothing, personal care,
housekeeping . . . and for making sure the conservatee’s healthcare needs are met.’”
Silverado is wrong for several reasons, and those reasons distinguish this
case from those cited. We do not disagree with the holdings of Hutcheson or Garrison v.
Superior Court, supra, 132 Cal.App.4th 253, that admission to a residential facility is
essentially a health care decision. But that is the beginning of the inquiry, not the end,
and neither of those cases address conservatorships.
First, the Holleys were, at the time the arbitration agreement was signed,
conservators of Elizabeth’s person but not her estate. Sections 2350 through 2361 set out
the powers and duties of a conservator of the person. A “conservator [of the person] has
the care, custody, and control of . . . [the] conservatee.” (§ 2351, subd. (a).) As
interpreted by the Judicial Council pursuant to section 1834, a conservator of the person
is “responsible for the conservatee’s care and protection. You must decide, within certain
limits, where the conservatee will live; and you must arrange for the conservatee’s health
care, meals, clothing, personal care, housekeeping, transportation, and recreation.”
(Judicial Council Forms, form GC-348.)
Assuming that conservators of the person may enter into contracts for these
purposes on the conservatee’s behalf, the duties of a temporary conservator have more
constraints. “A temporary conservator should avoid making long-term decisions or
8
changes that could safely wait until a general conservator is appointed. As temporary
conservator, you may not move a conservatee from his or her home, unless there is an
emergency, or sell or give away the conservatee’s home or any other assets without prior
court approval.” (Judicial Council Forms, form GC-348.) By purporting to sign the
arbitration agreement on Elizabeth’s behalf, the Holleys were giving up an important
right – the right to use the courts for redress of grievances. As temporary conservators of
her person, this was simply beyond their powers without the court’s approval.
Second, the power of a conservator of the person to make medical decisions
without court approval or the conservatee’s consent is limited. Section 2354 states: “If
the conservatee has not been adjudicated to lack the capacity to give informed consent for
medical treatment, the conservatee may consent to his or her medical treatment. The
conservator may also give consent to the medical treatment, but the consent of the
conservator is not required if the conservatee has the capacity to give informed consent to
the medical treatment, and the consent of the conservator alone is not sufficient under this
subdivision if the conservatee objects to the medical treatment.” To the extent admission
to a residential facility and a concordant arbitration agreement is a “health care decision”
as Silverado asserts, they cannot escape the import of this provision. Without Elizabeth’s
signature, there is no substantial evidence that she consented. Without her consent, the
Holleys required a court adjudication that Elizabeth lacked capacity to make such
decisions. (§ 2355.) The court’s order on this point was not entered until October 30, six
days after the arbitration agreement was signed. Accordingly, the Holleys did not have
the power to make such decisions for Elizabeth at the time.
C. The Holleys’ Individual Claims
Although it did not raise the issue in its opening brief, Silverado argues in
its reply brief that the arbitration agreement is enforceable against the Holleys with
respect to their individual claims based on its language: “This agreement shall be binding
9
for any dispute except for disputes pertaining to collections or evictions. This agreement
is binding on all parties, including their personal representatives, executors,
administrators, successors, guardians, heir, and assigns.” Silverado asserts that the
Holleys “execut[ed] the Arbitration Agreement as Decedent’s conservators but they also
are Decedent’s heirs, thereby binding them to the Arbitration Agreement.”
This presumes, of course, that the arbitration agreement is valid in the first
place – which, as we discussed ante, it is not. Because they lacked the power as
temporary conservators to sign the arbitration agreement on Elizabeth’s behalf, this
language is irrelevant.
Further, there is no evidence they intended to sign the agreement in their
individual capacities. (Avila v. Southern California Specialty Care, Inc., supra, 20
Cal.App.5th at pp. 844-845.) The plain language of the document does not contemplate
third parties signing on their own behalf. Without evidence of their intent to waive any
personal claims, the arbitration agreement is not enforceable against the Holleys
individually. Arbitration remains, as we mentioned above, a matter of consent. (See id.
at pp. 843-844.)
D. Remaining Arguments
Silverado argues that “[c]ontrary to the trial court’s silence, the FAA
applies.” Ultimately, this is irrelevant to this case, particularly as the trial court did not
mention the issue one way or the other. Assuming the FAA does apply, an arbitration
clause can nonetheless be found unenforceable “upon such grounds as exist at law or in
equity for the revocation of any contract.” (9 U.S.C. § 2.) The FAA is simply not
relevant when there is no contract in the first place, which is the case here. The Holleys
did not have the authority to bind Elizabeth, and therefore, there was no existing
arbitration agreement to be governed by the FAA.
10
For the same reason, we need not consider the Hollleys’ argument that the
motion to compel arbitration was untimely, and therefore, Silverado waived the right to
arbitrate. We also need not consider their arguments regarding the unconscionability of
the agreement.
Outcome: The order denying the motion to compel arbitration is affirmed. The Holleys are entitled to their costs on appeal.
Plaintiff's Experts:
Defendant's Experts:
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