Subject Matter: Enforcing Arbitration Agreements
opinion (June 2014) wherein the appellate court upheld the trial court in
compelling arbitration where the son signed an arbitration agreement on behalf
of his father upon the father’s admission to the nursing home. In essence, this
opinion provides teeth to the third-party beneficiary argument when attempting
to enforce arbitration agreements.
admission: he lacked capacity to give informed consent. The son — who did did
not have power of attorney — signed on behalf of his father as the "resident’s
representative." The son later acquired POA over his father while still a
resident at the facility.
The court ruled that
arbitration agreements are enforceable even when the resident does not sign the
contract and was incapable of giving informed consent at the time the agreement
was entered into. This is because the resident, generally, is the
intended third-party beneficiary to these agreements. The dispositive
question is whether the resident benefits from the contract. According to
this opinion, whether the signatory (the son) had actual or apparent authority or signs as "Resident’s Representative" or "Legal Representative is
irrelevant; instead, the determinative factor is whether the resident /
third-party beneficiary "resided and received care" at the facility. Here, the resident was deemed an intended third-party beneficiary to the arbitration agreement because he received care and services from the nursing home for several years before filing suit.
The arbitration agreement was enforced despite the fact the resident did not sign the agreement or have the cognition to execute the agreement.
Firm/Company: Starnes Davis Florie LLP
Document Date: August 24 2014
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