Shorter v. Trilogy Healthcare of Allen II, LLC

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OHIO

WESTERN DIVISION

Danielle Shorter,

Individually and as the Administrator

Of the Estate of Annette Shorter, Case No. 3:22-cv-357

Plaintiff,

v. MEMORANDUM OPINION

AND ORDER

Trilogy Healthcare of Allen, II, LLC,

Defendant.

I. INTRODUCTION AND BACKGROUND

In 2014,1 Decedent Annette Shorter was admitted to a Lima, Ohio nursing home owned by

Defendant Trilogy Healthcare of Allen, II, LLC, and known as Springview Manor. (Doc. No. 1 at

2). Annette received rehabilitation and nursing home services at Springview Manor from the time of

her admission until September 2020. (Id.). Annette died on September 28, 2020, allegedly due, at

least in part, to pressure ulcers and other injuries she suffered as a result of Trilogy’s failure to

properly care for her. (Id.).

Following Annette’s death, an estate was opened in the Allen County, Ohio Probate Court.

Annette’s daughter, Danielle, was appointed as the administrator of her estate, and subsequently

initiated this lawsuit on behalf of the estate and herself. Plaintiff asserts claims for negligence,

wrongful death, loss of consortium, and punitive damages. (Id. at 2-3).

1 The Complaint alleges Annette moved into Springview Manor in 2012. (Doc. No. 1 at 2).

Defendant represents Annette became a resident in March 2014, not in 2012. (Doc. No. 7-1 at 2).

Plaintiff appears to concede March 2014 is the correct date. (See Doc. No. 9 at 2).

At the time Annette was admitted to Springview Manor, Plaintiff signed an arbitration

agreement (the “Agreement”). (Doc. No. 7-1 at 5-6). The Agreement states, among other things,

that claims “arising out of . . . any service, diagnosis, or care” provided by Springview Manor staff to

Annette, including negligence, malpractice, “or any other claim based on any departure from

accepted standards of medical, nursing, health care[,] or safety,” shall be subject to binding

arbitration. (Id. at 5). Trilogy has filed a motion to compel arbitration based upon the Agreement

and to stay the remainder of the proceedings, including Plaintiff’s loss of consortium claim, until the

arbitration proceedings are completed. (Doc. No. 7). Plaintiff filed a brief in opposition to Trilogy’s

motion, (Doc. No. 9), and Trilogy filed a brief in reply. (Doc. No. 10). For the reasons stated

below, I deny Trilogy’s motion.

II. DISCUSSION

Trilogy argues Plaintiff must be compelled to submit to binding arbitration for all claims

arising from allegedly deficient care. (Doc. No. 7). Plaintiff contends the Agreement is not

enforceable, and therefore none of her claims are subject to arbitration, because she did not have

authority to sign the Agreement on Annette’s behalf. (Doc. No. 9). Before I reach the merits of the

parties’ arguments, I must first determine what law governs Trilogy’s motion to compel.

A. APPLICABLE LAW

Plaintiff, an Ohio resident, invoked diversity jurisdiction pursuant to 28 U.S.C. § 1332 in

filing suit against Trilogy, a Delaware resident. (Doc. No. 1 at 1). In the ordinary case, a federal

court sitting in diversity jurisdiction applies the substantive law of the state in which it sits and

federal procedural law. See, e.g., Biegas v. Quickway Carriers, Inc., 573 F.3d 365, 374 (6th Cir. 2009)

(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). But, in cases involving arbitration agreements,

federal courts also must consider what impact a federal law – the Federal Arbitration Act (the

“FAA”) – has on the proceedings.

Section 2 of the FAA provides that agreements to arbitrate disputes “shall be valid,

irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation

of any contract.” 9 U.S.C. § 2. The FAA articulates a “strong federal policy in favor of arbitration”

and dictates that contractual ambiguities or “doubts as to the parties’ intentions should be resolved

in favor of arbitration.” Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000) (citations omitted). In

enacting § 2, “Congress precluded States from singling out arbitration provisions for suspect status.”

Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996). Thus, the FAA preempts “state laws

[which are] applicable only to arbitration provisions.” Id. (emphasis in original).

State law, however, bears upon the question of whether the parties in fact validly entered

into an arbitration agreement. A court may apply state law to that question: “[S]tate law, whether of

legislative or judicial origin, is applicable if that law arose to govern issues concerning the validity,

revocability, and enforceability of contracts generally.” Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987)

(emphasis in original) (alteration added).

Thus, while I “examine the language of the [parties’] contract in light of the strong federal

policy in favor of arbitration,” I must apply Ohio law to the question of whether the Agreement

constitutes a valid agreement to arbitrate the parties’ disputes. Stout, 228 F.3d at 714.

B. MOTION TO COMPEL ARBITRATION

The parties’ present disagreement centers on Plaintiff’s role in executing the Agreement.

There is no dispute that Plaintiff signed the Agreement, not Annette. (See Doc. No. 7-1 at 6). But

Plaintiff contends she “did not have the legal authority to sign the Arbitration Agreement on behalf

of Annette” and, therefore, the Agreement is not enforceable. (Doc. No. 9 at 2). Trilogy argues the

Agreement can and must be enforced, asserting Plaintiff “ignores (1) the actual authority Plaintiff

had to enter into the Agreement, (2) the representations Plaintiff made in the Arbitration

Agreement, and (3) the actions of Plaintiff and decedent following the entry into the Agreement.”

(Doc. No. 10 at 2).

Under Ohio law, “[t]he relationship of principal and agent, and the resultant liability of the

principal for the acts of the agent, may be created by the express grant of authority by the principal.

Absent express agency, the relation may be one of implied or apparent agency.” Master Consol. Corp.

v. BancOhio Natl. Bank, 575 N.E.2d 817, 820 (Ohio 1991).

While Trilogy complains Plaintiff did not submit an affidavit in support of her position,

(Doc. No. 10 at 1), it is the “party alleging the existence of an agency relationship [which] bears the

burden of proving that such a relationship exists.” Nee v. State Indus., Inc., 3 N.E.3d 1290, 1308

(Ohio Ct. App. 2013) (citations omitted). See also Gardner Plumbing, Inc. v. Cottrill, 338 N.E.2d 757,

759 (Ohio 1975). Thus, it is Trilogy’s duty to point to evidence establishing that Plaintiff acted as

Annette’s agent.

1. Express Agency

Trilogy argues Plaintiff had actual authority to enter into the Agreement on Annette’s behalf

because Plaintiff (1) signed the Agreement as Annette’s legal representative and (2) had authority to

act on Annette’s behalf pursuant to her designation as agent in Annette’s durable power of attorney

for health care (“HCPOA”). (Doc. No. 10 at 3-4). Neither argument is persuasive.

I begin with Trilogy’s first argument. The Agreement contains two signature lines. One line

was designated for the “Signature of Facility Representative” and the other was for the “Signature of

Resident or Legal Representative.” (Doc. No. 7-1 at 6). Trilogy argues the Agreement is binding

because Plaintiff held herself out as Annette’s legal representative, as though she had actual authority

to act on Annette’s behalf. (Doc. No. 10 at 3).

But the law holds a principal liable for an agent’s actions only if the principal has engaged in

conduct which shows the agent has permission to act on the principal’s behalf. “‘Express authority

is that authority which is directly granted to or conferred upon the agent or employee in express

terms by the principal, and it extends only to such powers as the principal gives the agent in direct

terms; and the express provisions are controlling where the agency is expressly conferred.’” Master

Consol. Corp., 575 N.E.2d at 820 (quoting Stevens v. Frost, 32 A.2d 164, 168 (Maine 1943)) (emphasis

added). Trilogy offers no proof that Annette had communicated to Springview Manor staff

members that Plaintiff had authority to enter into the Agreement as her legal representative.

Trilogy, relying on Vogt v. Indianaspring of Oakley, 2012-Ohio-4124, 2012 WL 3985953 (Ohio

Ct. App. Sept. 12, 2012), also argues that, by signing on the Legal Representative signature line,

Plaintiff assumed the burden to demonstrate the Agreement is not valid. (Doc. No. 10 at 3). In

Vogt, the plaintiff had signed an arbitration agreement on behalf of her mother and subsequently

brought negligence and wrongful death claims against the defendant. Vogt, 2012 WL 3985953, at *1.

The Vogt court held “the presumption in favor of arbitrability” put the burden on the plaintiff to

prove she did not have the authority to bind the decedent as a legal representative and that, because

the plaintiff failed to disprove this point, the arbitration agreement was binding. Id. at *2. See also

Alford v. Arbors at Gallipolis, 123 N.E.3d 305, 315-16 (Ohio Ct. App. 2018).

There is reason to question the shifting burdens employed by the courts in Vogt and Alford.

As an initial matter, those decisions turn on its head the general and well-established principal that

“the burden of proving the agency . . . [is] upon the party who asserts it,” Gardner Plumbing, Inc., 338

N.E.2d at 759, without even acknowledging the general principal. Other Ohio courts of appeal have

rejected this burden shifting. See, e.g., Loyer v. Signature Healthcare of Galion, 66 N.E.3d 779, 784 (Ohio

Ct. App. 2016) (holding “defendants failed to meet their burden of proving that . . . [decedent’s

personal representative] had actual authority to bind . . . [decedent] to the terms of the arbitration

agreement”); Scott v. Kindred Transitional Care & Rehab., 2016-Ohio-495, 2016 WL 561756, at *2 (Ohio

Ct. App. Feb. 11, 2016) (holding defendant failed to establish decedent’s daughter had actual

authority to enter an arbitration agreement on decedent’s behalf); Brown v. Extendicare, Inc., 39 N.E.3d

896, 912 (Ohio Ct. App. 2015) (holding, “contrary to Vogt, it was Extendicare’s burden to establish”

an alleged agent had authority to act on the principal’s behalf).

Moreover, Vogt and Alford are factually distinguishable. In Vogt, the arbitration agreement

contained the following statement:

If Resident is unable to sign this Agreement, then a legal representative of the

resident may sign on his/her behalf. The person signing below certifies that he/she

has the legal authority to enter into this Agreement on Resident’s behalf with the

Facility either through a valid Power of Attorney or a guardianship appointment.

Vogt, 2012 WL 3985953, at *2.

The Alford arbitration agreement included similar language: “If signed by a Legal

Representative, the representative certifies that the Center may reasonably rely upon the validity and

authority of the Representative’s signature based upon actual, implied or apparent authority to

execute this Agreement as granted by the Resident.” Alford, 123 N.E.3d at 315.

By contrast, the Agreement in this case contains no such language. Instead, the words

“Legal Representative” appear exactly one time – in the signature line. This lone reference is not

sufficient to establish Annette had given Plaintiff express agency to enter into the Agreement on her

behalf. McFarren v. Emeritus at Canton, 997 N.E.2d 1254, 1259-60 (Ohio Ct. App. 2013)

(distinguishing Vogt). See also Loyer, 66 N.E.3d at 784 (holding the fact that an alleged agent signed

an arbitration agreement as the principal’s “purported ‘representative’ cannot vest [the alleged agent]

with actual authority in the absence of a statutorily valid power of attorney or court order”).

Next, Trilogy contends Plaintiff had express authority to enter into the Agreement as

Annette’s agent through Annette’s HCPOA. (Doc. No. 10 at 4-5). But this argument falls short as

well.

As Trilogy acknowledges, Annette’s HCPOA named Plaintiff as an agent authorized to make

decisions pursuant to the terms of the HCPOA. (See Doc. No. 10 at 4). Under Ohio law, the

agency granted by a health care power of attorney is conditional: “An attorney in fact under a

durable power of attorney for health care shall make health care decisions for the principal . . . only

if the attending physician of the principal determines that the principal has lost the capacity to make

informed health care decisions for the principal.” Ohio Rev. Code § 1337.13(A)(1) (emphasis

added).

The HCPOA echoes this statutory requirement, stating it is in effect “only when” Annette

could not make health care decisions for herself. (Doc. No. 9-1 at 2). The record contains no

evidence or suggestion that a physician had determined Annette was unable to make her own health

care decisions. McFarren, 997 N.E.2d at 1259 (“If the conditions required for the power of attorney

to come into being are not fulfilled, the representative has no authority to bind the principal.”).

Even if such evidence existed, it would not be sufficient to demonstrate that Plaintiff had

express authority to sign the Agreement on Annette’s behalf. The HCPOA lists Plaintiff as the first

alternate agent, rather than the primary agent. (Id. at 4). Trilogy provides no evidence that Plaintiff

would have been the appropriate person to act as Annette’s agent under the HCPOA.

Lastly, even if I again were to assume such evidence existed, Trilogy still would not be able

to show Plaintiff had express authority under the HCPOA to enter into the Agreement on Annette’s

behalf. The plain language of the HCPOA again mirrors the statutory language, granting an agent

“full and complete authority to make all health care decisions” for the principal. (Id. at 5) (emphasis

added). See Ohio Rev. Code § 1337.13(A)(1) (“An attorney in fact under a durable power of

attorney for health care shall make health care decisions for the principal . . . .”) (emphasis added).

A decision involving health care means a decision involving “any medical (including dental, nursing,

psychological, and surgical) procedure, treatment, intervention or other measure to maintain,

diagnose or treat any physical or mental condition.” (Doc. No. 9-1 at 3).

Under Ohio law, “a decision to arbitrate a dispute is not a decision on informed consent to

care, treatment, service, or procedure to maintain, diagnose, or treat the patient’s physical or mental

health or condition.” Primmer v. Healthcare Indus. Corp., 43 N.E.3d 788, 793 (Ohio Ct. App. 2015).

See also Primmer, 43 N.E.3d at 795 (holding a durable power of attorney for health care did not

convey actual authority to enter into an arbitration agreement because “the decision to waive the

right to arbitrate is a legal determination, not a health care decision”). Therefore, even if the

HCPOA had been operative, it would not provide Plaintiff with the authority to enter into an

arbitration agreement.

I conclude Trilogy fails to show Plaintiff had express authority to enter into the Agreement

on Annette’s behalf and deny its motion to compel arbitration on that basis.

2. Apparent Agency

Trilogy also argues Plaintiff had apparent authority to enter into the Agreement on Annette’s

behalf. (Doc. No. 10 at 5-6). Trilogy suggests it reasonably believed Plaintiff had the authority to

sign the Agreement because (1) Annette allowed Plaintiff to sign as legal representative and (2)

Annette listed Plaintiff as an agent on the HCPOA. Neither of these points prove Plaintiff had the

apparent authority to enter into the Agreement on Annette’s behalf.

A party which seeks to hold a principal liable for an alleged agent’s actions through apparent

agency “must affirmatively show: (1) that the principal held the agent out to the public as possessing

sufficient authority to embrace the particular act in question, or knowingly permitted him to act as

having such authority, and (2) that the person dealing with the agent knew of those facts and acting

in good faith had reason to believe and did believe that the agent possessed the necessary authority.”

Loyer, 66 N.E.3d at 784 (citation and internal quotation marks omitted). “The principal is

responsible for the agent’s acts only when the principal has clothed the agent with apparent

authority and not when the agent’s own conduct has created the apparent authority.” Ohio State Bar

Assn. v. Martin, 886 N.E.2d 827, 834 (Ohio 2008) (citing Master Consol. Corp., 575 N.E.2d at 822).

I conclude Trilogy has failed to meet its burden of showing Annette took specific actions

which clothed Plaintiff with apparent authority to enter into the Agreement. I already have rejected

Trilogy’s arguments based upon the HCPOA with respect to the theory of actual authority, and that

reasoning provides no stronger support with respect to the theory of apparent authority. See

Primmer, 43 N.E.3d at 796 (holding decedent’s power of attorney for health care did not cloak

decedent’s daughter with apparent authority to enter into arbitration agreement because entering

into such an agreement “did not constitute a health care decision under the plain language of the

instrument and statutory provisions”). Nor do Trilogy’s other arguments meet its burden here.

Trilogy argues its employees “had reason to believe that [Plaintiff] had the necessary

authority to act on her mother’s behalf based on the decision-making authority [Plaintiff] exercised

during the admission process.” (Doc. No. 10 at 6). But “the mere fact that a family member signed

other documents as part of the admission process did not cloak the family member with the

requisite apparent authority to bind the person admitted to a facility to an arbitration agreement that

he or she knew nothing about.” Scott, 2016 WL 561756, at *4. See also Loyer, 66 N.E.3d at 785 (“As

in Simmons [v. Extendicare Health Services, Inc., 2016-Ohio-4831, 2016 WL 360854 (Ohio Ct. App. July

5, 2016)], Calvin signed the paperwork for Edeltrud’s admission to defendants’ facility and the

arbitration agreement was not a precondition to Edeltrud’s admission.”); Lang v. Beachwood Pointe Care

Ctr., 2014-Ohio-1238, 2014 WL 1340212, at *2 (Ohio Ct. App. Mar. 27, 2014) (holding a principal

could not give her alleged agent “authority to bind her to an arbitration clause that she knew nothing

about” when “there is no evidence . . . [an] agreement to arbitrate disputes was a necessary

precondition for admission . . . [or that] the arbitration agreement one . . . [a prospective resident]

might reasonably expect to be a part of the admission process”). And Trilogy’s argument suffers

from the fatal flaw that it relies solely on the actions Plaintiff took, and “a claim of apparent

authority cannot be based on the purported agent’s acts.” Id.

Trilogy, relying on Brown v. Extendicare, Inc., 39 N.E.3d 896 (Ohio Ct. App. 2015), argues

Annette “clothed [Plaintiff] with the appearance of authority and knowingly permitted her to act as

agent on her behalf.” (Doc. No. 10 at 6). At least two Ohio courts of appeal have concluded that

the unusual facts presented in Brown make that case “‘fundamentally distinguishable,’” and I

conclude the same is true here. Simmons, 2016 WL 360854, at *5 (quoting Scott, 2016 WL 561756, at

*5).

As the Scott court noted, in Brown,

there were two separate admissions of the resident. In the first admission, the

resident’s daughter signed an admission agreement as the resident’s legal

representative for healthcare and financial decisions. In the second admission, the

resident herself signed the admission agreement, which also contained a designation of

her daughter as her legal representative for healthcare and financial decisions. Based

on these circumstances, the Second District held that the resident herself clothed her

daughter with the appearance of authority and knowingly permitted her daughter to

act as agent on her behalf.

Scott, 2016 WL 561756, at *5. See also Simmons, 2016 WL 3608654, at *5-6.

In this case, as in Scott and Simmons, there is no evidence in the record that Annette signed

any document designating Plaintiff as her representative, or otherwise took any affirmative act which

could reasonably cause Trilogy’s staff members to believe that Plaintiff had the authority to enter

into the Agreement on Annette’s behalf. Therefore, I conclude Trilogy has failed to carry its burden

of proof and deny its motion to compel on this basis as well.

III. CONCLUSION

For the reasons stated above, I deny Trilogy’s motion to compel arbitration and to stay these

proceedings. (Doc. No. 7).

So Ordered.

s/ Jeffrey J. Helmick

United States District Judge