J-A12008-15

                               2015 PA Super 168

SHIRLEY WASHBURN, ADMINISTRATRIX                  IN THE SUPERIOR COURT OF
OF THE ESTATE OF DONALD                                 PENNSYLVANIA
WASHBURN,

                          Appellee

                    v.

NORTHERN HEALTH FACILITIES, INC.;
EXTENDICARE HEALTH FACILITIES,
INC.; EXTENDICARE HEALTH SERVICES,
INC.; EXTENDICARE HEALTH NETWORK,
INC.; EXTENDICARE HOLDINGS, INC.;
EXTENDICARE, INC.; EXTENDICARE
REIT; EXTENDICARE, L.P.,

                          Appellants                    No. 1118 MDA 2014


                 Appeal from the Order Entered June 9, 2014
              In the Court of Common Pleas of Schuylkill County
                       Civil Division at No(s): S-399-13


BEFORE: BOWES, DONOHUE AND ALLEN, JJ.

OPINION BY BOWES, J.:                                  FILED AUGUST 07, 2015

      Northern Health Facilities, Inc., d/b/a Tremont Health & Rehabilitation,

an Extendicare entity (collectively “Tremont”), appeals from the June 9,

2014 order overruling preliminary objections in the nature of a petition to

compel arbitration. After careful review, we affirm.

      On March 4, 2011, Donald Washburn (“Mr. Washburn” or “Decedent”)

was   transferred   via    ambulance      from   the   East   Orange   Veterans’

Administration Medical Center to Tremont.          Shirley Washburn, his wife,

drove behind the ambulance.            Upon arrival at Tremont, nursing home
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personnel pulled Mrs. Washburn aside to sign the paperwork to enable her

husband’s admission to the facility. The staff member assisting her was not

the usual intake person. When Mrs. Washburn advised her that she did not

have power of attorney for her husband, the staff person insisted that all the

paperwork had to be signed prior to his admission.

       Among the documents executed by Mrs. Washburn was a stand-alone

“Alternative Dispute Resolution Agreement” (“ADR agreement”) between

Extendicare, on behalf of its affiliates and subsidiaries including Tremont,

and the Resident Donald Washburn.              Mr. Washburn did not sign the ADR

agreement. Mrs. Washburn signed next to the “Xs” placed by Tremont staff

on the lines for “Legal Representative for Healthcare Decisions” and “Legal

Representative for Financial Decisions.” ADR Agreement, 3/4/11, at 5.1 Mr.

____________________________________________


1
   Mrs. Washburn signed numerous documents in various representative
capacities. She signed a “Responsible Party Agreement” on the line
designated for the legal representative of the resident. That Responsible
Party Agreement provided: “It is Center policy that this form must be
presented to and signed by someone other than the Resident.” Responsible
Party Agreement, 3/4/11, at 1. She also signed the Admission Agreement,
an agreement between the Center and Mr. Washburn, as the legal
representative for both healthcare and financial decisions. On the form
giving permission to Tremont to hold and safeguard funds, Mrs. Washburn
signed as the “patient representative.” She signed the form authorizing the
expenditure of personal funds as the “resident representative.”         The
Resident Trust Fund Authorization form bears her signature as “Legal
Representative for Financial Decisions,” although the adjacent line for the
legal representative’s title, such as POA or guardian, is blank. On several
occasions, Mrs. Washburn requested copies of the documents she signed,
but Tremont did not provide them.



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Washburn remained a resident at Tremont until April 28, 2011.        He never

regained mental competency before his death on March 1, 2012.

      On March 1, 2013, Shirley Washburn filed the within survival action in

her capacity as Administratrix of the Estate of Donald Washburn, and alleged

that Tremont’s facility was negligently understaffed and mismanaged and

unable to meet the Decedent’s needs.          She averred that Tremont’s care

violated the Neglect of a Care/Dependent Person Statute, 18 Pa.C.S. § 2713,

and the Older Adults Protective Services Act, 35 P.S. § 10225.101 et seq.

She also maintained that, due to Tremont’s failure to provide sufficient food,

water,   medication   and   overall   care,   Decedent   became   dehydrated,

contracted pneumonia, urinary and respiratory infections, and sepsis, all of

which contributed to his death.

      Tremont filed preliminary objections to both the original and amended

complaints seeking to compel arbitration of the claim pursuant to the ADR

agreement signed by Mrs. Washburn in her representative capacity on behalf

of her husband.   The trial court ordered discovery on the enforceability of

the arbitration agreement, and, following argument and the submission of

briefs, the trial court overruled the preliminary objections. Tremont filed the

within appeal and complied with the trial court’s order to file a Pa.R.A.P.

1925(b) concise statement of errors complained of on appeal.          Tremont

presents five issues for our review, which we have re-reordered for ease of

disposition:

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      1. Whether the Court committed reversible error in concluding
         that Mrs. Washburn did not have authority to sign the ADR
         Agreement on her husband’s behalf.

      2. Whether the Court committed reversible error when it
         concluded that Plaintiff was not equitably estopped from
         attempting to disavow the ADR Agreement she signed on her
         husband’s behalf after she agreed to a full range of other
         contractual undertakings, and pursuant to her agreements as
         evidenced by her signature on his behalf, her husband
         received the full panoply of nursing home goods and services
         to be paid for, again as a result of Mrs. Washburn’s
         agreement and signature, by Medicare and then Medicaid.

      3. Whether the Court committed reversible error in concluding
         that Mr. Washburn was not a third party beneficiary of the
         ADR agreement signed for his benefit by his wife.

      4. Whether the Court committed reversible error in concluding
         that the Federal Arbitration Act did not mandate enforcement
         of the ADR Agreement Mrs. Washburn signed on her
         husband’s behalf.

      5. If arbitration is ordered as a result of this appeal, should the
         order concerning the remaining preliminary objections be
         vacated so that those issues can, consistent with the enforced
         ADR Agreement, be presented for decision to the arbitrator.

Appellants’ brief at 2-3.

      Our scope and standard of review of a claim that the trial court erred

in overruling a preliminary objection in the nature of a motion to compel

arbitration is whether there has been an abuse of discretion and whether the

trial court's findings are supported by substantial evidence.       Taylor v.

Extendicare Health Facilities, Inc., 113 A.3d 317, 320 (Pa.Super. 2015).

We employ a two-part test to determine whether the trial court should have

compelled arbitration: 1) whether a valid agreement to arbitrate exists, and

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2) whether the dispute is within the scope of the agreement.       Pisano v.

Extendicare Homes, Inc., 77 A.3d 651, 654 (Pa.Super. 2013); see also

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)).

      At issue herein is whether a valid agreement to arbitrate existed. It is

undisputed that the Mr. Washburn had dementia and lacked the capacity to

execute the arbitration agreement. Mrs. Washburn signed as the designated

legal representative for healthcare and financial decisions, but she did not

have her husband’s power of attorney and she had not been appointed his

guardian and she communicated that to Tremont’s employee.           Thus, the

question is whether Mrs. Washburn had the authority, apparent or

otherwise, as her husband’s agent, to legally bind him and his estate to

arbitrate claims arising from his stay at Tremont.

      Tremont, the party asserting agency, has the burden of establishing an

agency relationship.   Basile v. H & R Block. Inc., 761 A.2d 1115, 1120

(Pa. 2000).   “The basic elements of agency are the manifestation by the

principal that the agent shall act for him, the agent's acceptance of the

undertaking and the understanding of the parties that the principal is to be

in control of the undertaking.” Bradney v. Sakelson, 473 A.2d 189, 191

(Pa.Super. 1984) (quoting Restatement (Second) of Agency, § 1, Comment

b (1958)). “An agency relationship may be created by any of the following:

(1) express authority, (2) implied authority, (3) apparent authority, and/or

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(4) authority by estoppel.”      Walton v. Johnson, 66 A.3d 782, 786

(Pa.Super. 2013).

      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.

Walton, supra at 786 (citations omitted).

      Tremont concedes that Mrs. Washburn had no written express

authority from her husband to act on his behalf generally or with regard to

his admission at Tremont specifically.   It contends, however, that the trial

court erred in requiring evidence of specific authorization and maintains that

agency may be implied by attending circumstances.        Tremont directs our

attention to the Restatement (Second) of Agency § 22, which provides that

“husband or wife may be authorized to act for the other party to the marital

relationship.” Comment b to the section suggests that one spouse’s custom

or habit in acting for the other may imply the necessary apparent authority.

The identical provision in the Restatement (First) of Agency was cited with

approval in Sidle v. Kaufman, 29 A.2d 77 (Pa. 1942).

      Tremont contends that evidence that Mr. Washburn “habitually

permitted Mrs. Washburn to attend to some of his business matters” both



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before and after he became disabled created an implied or apparent agency.

Appellants’ brief at 16. Mrs. Washburn electronically signed their joint tax

returns on his behalf.    She also completed his application for Medicaid

benefits and a “Do not Resuscitate” form.      Tremont maintains that this

course of conduct distinguishes this case from Lapio v. Robbins, 729 A.2d

1229 (Pa.Super. 1999), where the issue was whether wife was liable for

default on a loan which her husband secured by signing her name. In that

case, there was no express authority conferred. This Court found no spousal

agency because there was no evidence that wife had ever permitted

husband to endorse her name on a check or transact her business affairs or

that she was involved in the business that benefitted from the loan.

     The trial court relied on this Court’s decision in Walton, supra, in

refusing to compel arbitration.   In that case, a hospital sought to enforce

against a patient, daughter, an arbitration agreement signed by her mother

on daughter’s behalf while daughter was comatose.            As herein, the

arbitration agreement was one in a series of documents presented to

mother; mother believed she was signing documents authorizing the hospital

to treat her daughter.    Mother did not have a power of attorney and

daughter had not expressly authorized mother to act on her behalf.      The

enforceability of the agreement depended on whether mother was acting as

daughter’s agent when she signed the document.




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      We concluded that daughter, who was comatose, could neither

authorize her own treatment nor grant such authority to mother. We held,

based on Sidle, supra at 81, that an agency relationship could not be

inferred from “mere relationship or family ties unattended by conditions,

acts or conduct clearly implying an agency.”      The hospital had failed to

satisfy its burden of demonstrating an agency relationship.     We relied on

deposition testimony from mother and daughter that daughter was unaware

of the arbitration clause, did not agree to arbitrate disputes, and did not

authorize her mother to so agree. Since the documents were not presented

to daughter for ratification when she regained consciousness, and there was

no evidence that she was aware of mother’s consent to arbitrate and

negligently failed to repudiate her mother’s consent, we found no agency by

estoppel. We held that the arbitration agreement was unenforceable as to

daughter.

      Tremont attempts to distinguish Walton on two bases: (1) it involved

a mother and adult daughter rather than a husband and wife, and the

Restatement (Second) of Agency § 22 was inapplicable, and (2) there was

no evidence that mother habitually acted as her daughter’s agent. We are

not persuaded that the marital relationship herein warrants a contrary

result. The Restatement (Second) of Agency § 22 does not create a marital

agency, but merely recognizes that due to the relationship, “circumstances

which in the case of strangers would not indicate the creation of authority or

                                    -8-
J-A12008-15



apparent authority may indicate it in the case of husband or wife.” We find

that may be equally true of a parent/child relationship.

      The second basis for distinguishing Walton is without factual support.

The trial court herein found no evidence that Mr. Washburn authorized his

wife to act on his behalf.    The trial court found that “Mrs. Washburn’s

testimony was that she believed her husband would have given her authority

to sign tax returns but he became sick and she took it upon herself to grant

herself that authority.” Trial Court Opinion, 6/9/14, at 10. The court relied

upon Turnway Corp. v. Soffer, 336 A.2d 871, 876 (Pa. 1975), for the well-

established proposition that an agent cannot “simply by his own words,”

clothe himself with apparent authority; such authority must come from the

principal.

      Furthermore, for purposes of apparent authority, the trial court

reasoned that Tremont did not know at the time it presented Mrs. Washburn

with the admission packet that she had executed tax returns on her

husband’s behalf. It concluded that, “[n]o facts were presented to indicate

that Mr. Washburn by words or conduct led Tremont Nursing Center to

believe Mr. Washburn had granted his wife the authority to sign the

admission paperwork.” Id.

      The record supports the trial court’s view of the evidence and we find

Walton sufficiently analogous as to be controlling herein. It is well settled

that neither a husband nor wife has the power to act as agent for the other

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merely due to the marriage relationship.           Bradney, supra. However, the

law recognizes that, due to the nature of the relationship, there may be

circumstances where one spouse has apparent authority to act for the other.

In Tonuci v. Beegal, 145 A.2d 885, 888 (Pa.Super. 1958) (citing

Restatement, Agency 2d § 22(b)), husband had a power of attorney from his

wife to sign checks. In addition, husband had acted as her agent throughout

the transaction at issue as well as many other transactions.             Husband

reported that his wife gave him blanket authority to make whatever financial

arrangements he felt were in her best interest.          On those facts, we found

that husband contracted as an agent for his wife.

       The flaw in Tremont’s position is that while there is evidence that Mrs.

Washburn previously acted on her husband’s behalf, the record is devoid of

evidence that Mr. Washburn ever authorized his wife to do so.           Although

Mrs. Washburn filed a joint tax return, her husband did not authorize her to

fill in his birthdate or social security number for the electronic signature.

Mrs. Washburn believed that he would have authorized her to execute the

tax form had he not been sick. Deposition, Shirley Washburn, 11/13/13, at

26.2    She signed the form declining CPR and extraordinary measures

____________________________________________


2
   Mrs. Washburn’s deposition is not contained in the certified record. It is
the responsibility of the appellant to ensure that the certified record is
complete prior to transmittal to this Court. Parr v. Ford Motor Co., 109
A.3d 682, 695 (Pa.Super. 2014) (en banc) (holding under the Pa.R.A.P.
(Footnote Continued Next Page)


                                          - 10 -
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because her husband specifically articulated that he did not want such

measures performed.          She did not sign documents because he authorized

her to do so. Id. at 71.

      Moreover, the fact that Mrs. Washburn affixed her husband’s signature

to joint tax returns and healthcare forms does not establish that her

husband authorized her to act as his agent in the circumstances herein.

Mrs. Washburn signed the ADR agreement on the lines indicated by an “X”

because a Tremont employee represented that her signature was required

for admission.    She signed the application for Medicaid benefits “because

Tremont personnel told her she had to sign it.” Id. at 42. Conspicuously

absent is the authority from the principal to act as his agent. See Turnway

Corp., supra.

      In addition, apparent authority exists where a principal, by words or

conduct, leads people with whom the alleged agent deals to believe that the

principal has granted agent authority he or she purports to exercise.

Turner Hydraulics, Inc. v. Susquehanna Constr. Corp., 606 A.2d 532,

                       _______________________
(Footnote Continued)

1921, any document which is not part of the officially certified record is
deemed non-existent. See also Commonwealth v. Walker, 878 A.2d
887, 888 (Pa.Super. 2005); Fiore v. Oakwood Plaza Shopping Ctr., 585
A.2d 1012, 1019 (Pa.Super. 1991).        However, since the transcript is
contained in the reproduced record, and there is no objection to its accuracy,
we may rely upon it. Wmi Group, Inc. v. Fox, 109 A.3d 740, 744 n.5
(Pa.Super. 2015) (citing Commonwealth v. Brown, 52 A.3d 1139, 1145
n.4 (Pa. 2012)).



                                           - 11 -
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535 (Pa.Super. 1992). There were no prior dealings between Mr. Washburn

and Tremont.      When the arbitration agreement was signed, Tremont was

unaware that Mrs. Washburn had been signing her husband’s name to some

documents. Thus, it had no basis to infer that she was authorized to act on

his behalf.    To the contrary, Mrs. Washburn specifically informed Tremont

that she did not have a power of attorney or guardianship for her husband.

On the record before us, we find no basis to disturb the ruling of the trial

court.

         Tremont’s equitable estoppel argument fares no better.        Tremont

maintains that, since Mr. Washburn accepted the benefit flowing from his

wife’s agreements on his behalf, namely the services set forth in the

admission agreement, he is estopped to disavow the arbitration agreement

“because his estate finds that one obligation distasteful.” Appellants’ brief at

20 (citing E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber &

Resin Intermediates, S.A.S., 269 F.3d 187, 200 (3d Cir. 2001) and

Friedman v. Yula, 679 F.Supp.2d 617, 627-28 (E.D. Pa. 2010)). The trial

court distinguished DuPont and Friedman because they involved a single

contract containing a mandatory arbitration clause while the arbitration

agreement herein is a stand-alone agreement. Tremont contends that is a

“distinction without a difference.”    Appellants’ brief at 20.   It directs our

attention to THI of New Mexico at Hobbs Ctr., LLC v. Patton, 2012 WL

112216 (D.N.M. 2012), where the federal district court in New Mexico

                                      - 12 -
J-A12008-15



rejected a nursing home resident’s representative’s attempt to disavow an

arbitration agreement while retaining the benefits of the separate admission

agreement.

      We agree with the trial court that the distinction is a critical one. In

DuPont, the Court of Appeals for the Third Circuit acknowledged that other

courts had applied equitable estoppel to bind non-signatories to an

arbitration clause when the non-signatory knowingly exploits the agreement

containing the arbitration clause despite having never signed the agreement.

(citing Thomson-CSF, S.A. v. American Arbitration Assoc., 64 F.3d 773,

778 (2d Cir. 1995)).    The DuPont court refused, however, to apply the

doctrine in that case as there was no evidence that DuPont embraced the

agreement or received any direct benefit under it.

      Similarly, in this case, there is no evidence that the Decedent availed

himself of the ADR agreement or received any benefit under that agreement.

The ADR agreement was separate from the admission agreement and

admission was not conditioned upon agreeing to arbitrate.          Thus, the

agreement to arbitrate was not part of the contractual quid pro quo for

admission to the facility and its attendant benefits. Such was not the case in

THI of New Mexico.       Although that arbitration agreement was separate,

admission to the facility was contingent upon agreeing to arbitrate.      The

arbitration agreement provided: “Resident/Representative understands that




                                    - 13 -
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signing this Agreement to arbitrate is a precondition for medical treatment

or admission to the Health Care Center.” Id. at *2.

      Nor do we find any merit in Tremont’s claim that Mr. Washburn’s

estate is required to arbitrate his survival action because he was an intended

third-party beneficiary of the arbitration agreement signed by his wife. Mrs.

Washburn did not sign the ADR agreement in her personal capacity, but in a

representative capacity. Mr. Washburn could not be an intended third-party

beneficiary of a contract to which he was ostensibly a party. In short, there

is no evidence in the writing that the parties intended to confer third-party

beneficiary status upon Mr. Washburn. Burks v. Fed. Ins. Co., 883 A.2d

1086 (Pa.Super. 2005).

      Thus, there was no enforceable arbitration agreement under any of the

theories advanced by Tremont. Despite national and state policies favoring

arbitration, a party cannot be compelled to arbitrate in the absence of a valid

agreement to do so under either Pennsylvania law or the Federal Arbitration

Act. See Prima Paint Corp. v. Conklin Mfg. Co., 388 U.S. 395, 404 n.12

(construing the Federal Arbitration Act as designed “to make arbitration

agreements as enforceable as other contracts, but not more so”); Taylor,

supra at 324 (absent an agreement to arbitrate, arbitration cannot be

compelled).    Moreover, since we are affirming the trial court’s order

overruling the petition to arbitrate, Tremont’s request that the court’s rulings




                                     - 14 -
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on the other preliminary objections be vacated and addressed by the

arbitrator is moot.

      Order affirmed. Case remanded. Jurisdiction relinquished.


Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 8/7/2015




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