Shook v. Renewcare

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

SUSAN SHOOK,
Plaintiff/Appellee,

v.

RENEWCARE OF SCOTTSDALE Inc., et al.,
Defendants/Appellants.

No. 1 CA-CV 19-0358
FILED 5-28-2020

Appeal from the Superior Court in Maricopa County
No. CV2017-053385
The Honorable Bruce R. Cohen, Judge

AFFIRMED

COUNSEL

Bossie Reilly & Oh, PC, Phoenix
By Mary E. Reilly, Melanie L. Bossie, Donna Y. Oh
Co-Counsel for Plaintiff/Appellee

Mark J. DePasquale, PC, Phoenix
By Mark J. DePasquale
Co-Counsel for Plaintiff/Appellee

Ensign Services Inc., Higley
By Michael J. Ryan
Counsel for Defendants/Appellants
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Decision of the Court

MEMORANDUM DECISION

Judge James B. Morse Jr. delivered the decision of the Court, in which
Presiding Judge David D. Weinzweig and Judge Jennifer M. Perkins joined.

M O R S E, Judge:

¶1 Defendants, collectively called "Osborn Health and
Rehabilitation Center" or "Osborn," appeal the superior court's denial of
Osborn's motion to compel arbitration. We affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 In 2014, Milris Shook ("Milris") was admitted to Osborn's
facility for nursing and rehabilitation services and the facility asked her to
sign certain admission documents. Milris told her daughter, Andeanna
Farnes ("Farnes"), "you do it." Five days later, Farnes signed the papers,
including two optional arbitration agreements ("the Agreements"), as
"Andeanna Farnes for Milris Shook[.]" Milris's admission records reflect
that she was alert but confused at the time of admission. The records also
show that when Milris was admitted to Osborn's facility she did not
understand where she was or what time it was. She also slurred her speech
and had trouble communicating and finishing her thoughts. Seven years
before her admission, Milris executed a health care power of attorney that
designated Farnes as Milris's "agent for all matters relating to [her]
health[.]"

¶3 Milris died two years after her admission to Osborn's facility.
Plaintiff Susan Shook ("Plaintiff"), Milris's daughter and personal
representative of her estate, sued Osborn, alleging negligence and
violations of the Adult Protective Services Act, A.R.S. § 46-455. Osborn
moved to compel binding arbitration based on the Agreements executed by
Farnes. Plaintiff countered that Farnes had no authority to sign the
Agreements on Milris's behalf. The superior court found a factual dispute
over Farnes' authority to sign the Agreements and held an evidentiary
hearing to resolve the issue.

¶4 Plaintiff's expert was the only witness to testify at the
evidentiary hearing. He concluded that Milris could not make an informed
decision when she supposedly delegated authority to her daughter. The

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expert had reviewed Milris's medical records and emphasized her
dementia.

¶5 The superior court considered the expert testimony and
documentary evidence entered during the hearing and denied the motion
to compel arbitration, finding that Osborn failed to prove that Farnes had
the authority to act as Milris's agent and that Milris's actions did not confer
actual or apparent authority on Farnes to sign an arbitration agreement.
Further, the superior court found that Milris's health care power of attorney
did not confer authority on Farnes to execute the Agreements.

¶6 Osborn moved for reconsideration, which the superior court
denied. Osborn timely appealed, and we have jurisdiction under A.R.S. §
12-2101.01(A)(1).

DISCUSSION

¶7 Osborn argues that the superior court erred when it found
Farnes lacked the authority to enter into the Agreements on behalf of Milris.
"The trial court's review on a motion to compel arbitration is limited to the
determination as to whether an arbitration agreement exists. We must
defer, absent clear error, to the factual findings upon which the trial court's
conclusions are based." Estate of Decamacho ex rel. Guthrie v. La Solana Care
and Rehab, Inc., 234 Ariz. 18, 20, ¶ 8 (App. 2014) (quotation marks and
citations omitted). We review issues of law de novo. Id.

¶8 "Generally, '[t]he question of whether an agency existed is one
of fact.'" Ruesga v. Kindred Nursing Ctrs., LLC, 215 Ariz. 589, 595, ¶ 21 (App.
2007) (quoting Corral v. Fid. Bankers Life Ins. Co., 129 Ariz. 323, 326 (App.
1981)). We defer to the superior court's findings of fact unless those
findings are clearly erroneous. Id. at 597, ¶¶ 26-27. The superior court's
factual finding of agency, or lack thereof, is "not clearly erroneous if
substantial evidence supports it." Id. at ¶ 26. However, the question of
agency is a legal determination if the facts are not in dispute. Id. at 595, ¶
21.

¶9 Osborn relies on Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137
S.Ct. 1421 (2017), to argue that any doubt regarding the formation of an
arbitration agreement must be resolved with a presumption that the
agreement was properly formed. This misreads Kindred Nursing, which
reaffirmed the principle that the Federal Arbitration Act simply requires the
states "to place [arbitration] agreements on equal footing with all other
contracts." Id. at 1429. It does not, however, alter our standard of review
or anoint favored status on the formation of arbitration agreements.

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I. The Superior Court Was Not Clearly Erroneous Regarding Milris's
Competency.

¶10 Osborn argues that its evidence should have been more
highly valued by the superior court in determining whether Milris was
competent at admission. For the first time in its reply brief, Osborn also
argues that the testimony of Plaintiff's expert is insufficient as a matter of
law under Golleher v. Horton, 148 Ariz. 537, 542 (App. 1985).1 But Golleher
does not suggest that an expert's opinion about an individual's competency
cannot be considered. It simply noted that the expert in that case did not
reach a conclusion about competency. See id. (finding that a particular
expert's testimony fell "short of expressing" a conclusion that an individual
was incompetent). Further, the expert in Golleher had speculated that an
individual's continued alcohol use may have further impaired that
individual's judgment. Id. We find no similar speculation here and find
Golleher inapplicable.

¶11 In a detailed decision, the superior court outlined the
evidence provided by Osborn and Plaintiff. The court noted that Osborn's
records at the time of Milris's admission showed she "was confused as to
time and space [and] had slurred speech." Additionally, one of Osborn's
employees separately stated that Milris was disoriented at the time of her
admission. This evidence, combined with the expert's opinion, provided a
substantial evidentiary basis for the superior court's factual findings.

¶12 Osborn argues that the superior court did not properly credit
the evidence it cited, such as the fact that Farnes testified that she believed
Milris was capable of making decisions for herself or the fact Milris made
other decisions, such as refusing to attend certain medical appointments.
Furthermore, Osborn argues that the superior court's finding is fatally
flawed because five days passed between Milris's admission, when her
confusion was initially noted, and the execution of the Agreements.

¶13 We recognize that the superior court could have reached a
different conclusion, but "we do not reweigh conflicting evidence" on
appeal. See Ruesga, 215 Ariz. at 597, ¶ 27 (citation omitted). The superior
court considered the evidence cited by Osborn and determined that Milris

1 Plaintiff correctly points out Osborn failed to challenge this finding
in its opening brief. Because the superior court heavily relied on Milris's
competency in reaching its decision, however, we exercise our discretion
and consider this argument. See Stein v. Sonus USA, Inc., 214 Ariz. 200, 203,
¶ 13 n. 3 (App. 2007).

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was not competent to grant Farnes authority. Given the expert's opinion
and the records reflecting Milris's confusion, we cannot say the superior
court's finding was clearly erroneous.

¶14 Osborn also argues the court failed to consider testimony
from an Osborn employee about the organization's custom and practice to
confirm that patients have authorized their children to complete paperwork
when signed. Whatever Milris is alleged to have said, the record included
reasonable evidence that she was not competent to authorize her daughter
to sign the agreements. The alleged statement does not undermine the
other substantial evidence on which the superior court relied.

¶15 We affirm the superior court's determination that Milris
lacked competency to authorize Farnes to sign on her behalf, both at
admission and five days later when Farnes signed the documents.

II. The Superior Court Did Not Err By Finding The Health Care
Power of Attorney Did Not Cover Optional Arbitration
Agreements.

¶16 Osborn argues that Milris authorized Farnes to execute the
Agreements under a health care power of attorney. Plaintiff counters that
Osborn waived the argument and that the health care power of attorney
did not include the authority to enter into arbitration agreements. We first
address waiver.

¶17 Osborn's counsel told the superior court that he was not
relying on the health care power of attorney to prove Farnes' authority, but
later clarified that he would raise that argument if the superior court found
Milris incompetent. Neither Farnes nor Milris invoked the health care
power of attorney at Milris's admission or when Farnes signed the
documents. In its ruling, the superior court noted that this argument was
not well developed, but ultimately held that the health care power of
attorney "would not be a basis to conclude that [Milris] conferred authority
upon her daughter to [execute the Agreements]." The superior court
considered this matter and we find Osborn did not waive the argument.

¶18 The health care power of attorney in question provided, in
relevant part:

I, Milris Anna Shook, as principal, designate Andeanna
Denise Farnes as my agent for all matters relating to my
health (including mental health) and including, without
limitation, full power to give or refuse consent to all medical,

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surgical, hospital and related health care. This power of
attorney is effective on my inability to make or communicate
health care decisions […] or when there is uncertainty
whether I am dead or alive have the same effect on my heirs,
devisees and personal representatives as if I were alive,
competent and acting for myself.

¶19 Courts across the country have reached different conclusions
regarding whether such a health care power of attorney covers arbitration
agreements. Some states have held that entering into an optional
arbitration agreement at admission is a legal decision and not a health care
decision. See Tex. Cityview Care Ctr., L.P. v. Fryer, 227 S.W.3d 345, 352 (Tex.
App. 2007) (holding that a medical power of attorney did not confer the
authority to make "legal, as opposed to health care, decisions"); see also
Johnson v. Kindred Healthcare, Inc., 2 N.E.3d 849, 857-59 (Mass. 2014); Ping v.
Beverly Enterprises, Inc., 376 S.W.3d 581, 593 (Ky. 2012). Others have held
that the decision to enter into an arbitration agreement is both a legal
decision and a health care decision. See Owens v. Nat'l Health Corp., 263
S.W.3d 876, 884-85 (Tenn. 2007) (noting that the "purported distinction
between making a legal decision and a health care decision fails to
appreciate that signing a contract for health care services, even one without
an arbitration provision, is itself a 'legal decision'"); see also Moffett v. Life
Care Ctrs. of Am., 187 P.3d 1140, 1145-46 (Colo. App. 2008); Garrison v.
Superior Court, 33 Cal. Rptr. 3d 350, 358-61 (Cal. Ct. App. 2005).

¶20 All courts addressing this question have analyzed both the
state laws governing health care powers of attorney and the specific
language used in the health care power of attorney. See, e.g., Johnson, 2
N.E.3d at 858-59 (analyzing the language of the Massachusetts statute
governing health care agent's authority); Owens, 263 S.W.3d at 884
(analyzing Tennessee statute defining "health care decision" in the context
of a durable power of attorney for health care). Because the language of
Milris's health care power of attorney essentially tracks the standard form
language provided in the statute, see A.R.S. § 36-3224, we take the same
approach.

¶21 In her health care power of attorney, Milris designated Farnes
as her agent. A.R.S. § 36-3201 defines "agent" as "an adult who has the
authority to make health care treatment decisions for another person, referred
to as the principal, pursuant to a health care power of attorney." A.R.S. §
36-3201(1) (emphasis added). The phrase "health care treatment decisions"
in the statute ties the "decisions" for which agency is conferred to decisions
related to obtaining or receiving medical treatment. Though "an agent's

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authority to make health care decisions on behalf of [a] principal is limited
only by the express language" of the health care power of attorney at issue,
A.R.S. § 36-3223(B), our understanding of what constitutes a "health care
decision" is informed by the description of an agent's powers in A.R.S. § 36-
3201(1). Therefore, a generic health care power of attorney grants an agent
authority over treatment decisions. This is further supported by the fact
that both the health care power of attorney at issue, as well as the sample
contained in A.R.S. § 36-3224, grant the agent "full power to give or refuse
consent to all medical, surgical, hospital and related health care." Though
not limiting, this language reflects that the agent's powers are focused on
obtaining or refusing medical treatment.

¶22 Two unpublished decisions from this Court provide
persuasive authority for this outcome. See Yazedijian v. ARC Santa Catalina
Inc., 2 CA-CV 2017-0045, 2018 WL 615106 at * 5, ¶ 20 (Ariz. App. Jan. 29,
2018) (mem. decision) ("Whether to sign a nursing home's optional
arbitration agreement is not a healthcare decision."); Hurst v. Silver Creek
Inn, LLC, 1 CA-CV 14-0338, 2015 WL 3551874 at * 5, ¶ 22 (Ariz. App. June 4,
2015) (mem. decision) ("Whether to agree to arbitration is not a health care
decision, particularly where, as here, the agreement to arbitrate is not a
condition of admission or treatment."). A.R.S. § 36-3201(1) provides that an
agent in a health care power of attorney has authority to make health care
treatment decisions for a principal. Because the Agreements at issue in this
case are optional and not a condition of obtaining treatment at Osborn's
facility, and because Milris's health care power of attorney tracks the
statutory language, the superior court did not err in finding that Milris's
health care power of attorney did not convey authority to enter into
optional arbitration agreements on Milris's behalf. See Yazedijian, 2 CA-CV
2017-0045, at * 5, ¶ 20; Hurst, 1 CA-CV 14-0338, at * 5, ¶ 22.2

III. The Superior Court Did Not Err By Finding There Was No Implied
Actual Authority.

¶23 Osborn argues the evidence shows Farnes had implied actual
authority, pointing to Milris's statements to Osborn's agent and Farnes, that

2 Because Milris's health care power of attorney essentially mirrored
the statutory language, we do not have occasion to consider whether
different wording of the health care power of attorney would yield a
different result. Our holding is limited to the health care power of attorney
at issue in this case.

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Farnes completed all Milris's admission paperwork, and that Farnes
handled certain financial matters for Milris.

¶24 "Actual authority may be proved by direct evidence of
express contract agency between the principal and agent or by proof of facts
implying such a contract or the ratification thereof." Escareno v. Kindred
Nursing Ctrs. West, LLC, 239 Ariz. 126, 129-30, ¶ 8 (App. 2016) (quotation
marks and citation omitted).

¶25 Osborn relies heavily on Ruesga, which found actual implied
authority based in part on a wife's almost fourteen-year history of signing
documents for her husband. 215 Ariz. at 599, ¶¶ 35, 36. But unlike in
Ruesga, Osborn points to no such history here. Instead, Osborn relies on
Farnes' actions at the facility and the statements made by Milris. But those
actions and statements were made while Milris was incompetent and thus
could not convey express or implied actual authority. Cf. id. at 597-98, ¶¶
29-30 (noting unresponsive principal could not convey express or apparent
authority).

¶26 Furthermore, Osborn's reliance on Ruesga fails to consider
Escareno, which distinguished general family relationships from the spousal
relationship. 239 Ariz. at 130, ¶ 11 (citing Ruesga, 215 Ariz. at 598, ¶ 33).
Escareno noted that "a pattern of care-giving alone is insufficient to create
an agency relationship" that would allow children to enter into arbitration
agreements on behalf of their parents. 239 Ariz. at 132, ¶ 16. We affirm the
superior court's finding that no implied actual authority existed.

IV. Osborn Waived Its Estoppel Argument.

¶27 Finally, Osborn argues for the first time on appeal that the
doctrine of equitable estoppel requires arbitration here. But unlike the
competency issue, Osborn never raised equitable estoppel before the
superior court. "[A]bsent extraordinary circumstances, errors not raised in
the trial court cannot be raised on appeal." Trantor v. Fredrikson, 179 Ariz.
299, 300 (1994). We find no compelling reason to address this argument
and find that it is waived.

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CONCLUSION

¶28 We affirm the superior court's decision. Plaintiff has
requested an award of her reasonable costs under A.R.S. § 12-341. Because
Plaintiff prevailed on appeal, we grant this request and award her costs.

AMY M. WOOD • Clerk of the Court
FILED: AA

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