Business Law

Gordon v. Atria Management Company, LLC (Oct. 1, 2021, A161379) __ Cal.App.5th __ [2021 WL 4988882]

A durable power of attorney authorizes an attorney-in-fact to execute a residential care facility’s stand-alone arbitration agreement.

Janet Gordon executed a Durable Power of Attorney and Nomination of Conservator (DPOA), appointing her son Randall Gordon as her attorney-in-fact. The DPOA authorized Randall to arbitrate and pursue litigation on her behalf and to make arrangements for her transfer to a residential facility, but the DPOA disallowed him from making medical or healthcare decisions on Janet’s behalf. When Janet moved into the Atria Walnut Creek residential care facility, Randall executed an Atria-prepared arbitration agreement on her behalf. After Janet fell and broke her hip, she—through Randall as her guardian ad litem—sued Atria asserting causes of action for elder abuse and negligence. The trial court denied Atria’s petition to compel arbitration. Relying on Hutcheson v. Eskaton FountainWood Lodge (2017) 17 Cal.App.5th 937, the court ruled that Randall lacked authority to bind Janet to arbitration because admitting someone to a residential care facility for the elderly is a healthcare decision that the DPOA did not authorize Randall to make. Atria appealed.

The Court of Appeal reversed. The court held that, because the DPOA did not prohibit Randall from agreeing to arbitrate, he was authorized to execute the arbitration agreement on Janet’s behalf. The court reasoned that the DPOA’s grant of authority allowing Randall to arbitrate on Janet’s behalf reasonably included the power to execute an arbitration agreement on her behalf as well. The court distinguished Hutcheson, explaining that it dealt with an individual who was admitted to a residential care facility for dementia care, and admission to such a facility was a healthcare decision that could not be made by someone who lacked authority to make healthcare decisions. The court rejected Janet’s reliance on Atria’s alleged pre-admission representations about providing for her medical needs, explaining “the upshot of these allegations was not that Janet was admitted to obtain medical care, but that Atria perpetrated a ‘bait-and-switch scheme’ ” and later failed to provide the promised care. Unlike the resident in Hutcheson, Janet was admitted to Atria to obtain supervision and assistance with daily living, not healthcare.  The court also explained that, while a healthcare power of attorney is sufficient to confer authority to execute an arbitration provision within an admission agreement, a healthcare power of attorney is not required for an attorney-in-fact to have authority to execute a stand-alone arbitration agreement. Thus, Randall was authorized under the DPOA to execute the stand-alone arbitration agreement after Janet was admitted regardless whether she was admitted for her medical needs.

The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission.

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or htwatson@horvitzlevy.com.


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