Bookman v. Britthaven, Inc.

NO. COA13-948

NORTH CAROLINA COURT OF APPEALS

Filed: 15 April 2014

TERRI DEW BOOKMAN, Administratrix

of the Estate of CARTHINA ROBERSON

DEW,

Plaintiff,

v. Wilson County

No. 2011 CVS 1575

BRITTHAVEN, INC., D/B/A BRITTHAVEN

OF WILSON, DAVITA RX, LLC, WILSON

MEDICAL CENTER, MORGAN JONES, and

COURTNEY LASSITGER,

Defendants.

Appeal by defendant from order entered 10 May 2013 by Judge

Milton F. Fitch, Jr. in Wilson County Superior Court. Heard in

the Court of Appeals 21 January 2014.

Taylor Law Office, by W. Earl Taylor, Jr., for plaintiff-

appellee.

Williams Mullen, by Brian C. Vick and Elizabeth D. Scott,

for defendant-appellant.

HUNTER, Robert C., Judge.

Defendant Britthaven, Inc. d/b/a Britthaven of Wilson

(“Britthaven”) appeals from the trial court’s order denying its

motion to compel arbitration. On appeal, Britthaven argues that

apparent authority existed to bind the principal to the

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arbitration agreement, and therefore, the trial court erred by

ruling that the arbitration agreement is unenforceable.

After careful review, we reverse the trial court’s order

and remand for further proceedings.

Background

On 24 August 2010, Carthina Dew (“Mrs. Dew”) was admitted

into Britthaven after being discharged from Wilson Medical

Center following surgery on her broken femur. Mrs. Dew was

awake, alert, lucid, and responsive to questions when she

arrived at Britthaven. However, she did not sign any of the

legal documents needed to admit her into the facility. Her

husband, Frederick Dew (“Mr. Dew”), and her daughter, Terri Dew

Bookman (“Mrs. Bookman”), signed all relevant documents. They

met with Janet Watson (“Ms. Watson”), Britthaven’s admission

coordinator. Ms. Watson filed an affidavit with the trial court

averring that Mr. Dew and Mrs. Bookman presented themselves as

having authority to sign all documents needed on Mrs. Dew’s

behalf prior to her admission into Britthaven. Ms. Watson

presented Mr. Dew and Mrs. Bookman with twelve documents,

including one titled “RESIDENT AND FACILITY ARBITRATION

AGREEMENT – READ CAREFULLY” (“the arbitration agreement”). When

it came time to sign the documents, Mr. Dew had Mrs. Bookman

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sign his name, “Fred Dew,” on the arbitration agreement and all

other admission documents. Mrs. Bookman primarily signed Mr.

Dew’s name on signatory lines intended for either the resident’s

signature or the signature of the resident’s representative or

responsible party. For example, on the “Facility Resident

Directory Opt Out Instructions,” Mrs. Bookman signed “Fred Dew”

on the line reserved for the “Signature of Resident or Legal

Representative.”

Mrs. Dew was discharged from Britthaven on or about 7

September 2010. She died on 3 November 2010, allegedly due to

complications with large pressure ulcers. On 28 September 2011,

Mrs. Bookman filed a wrongful death action against Britthaven

and four other defendants in her capacity as Administratrix of

Mrs. Dew’s estate (“plaintiff”).1 Britthaven moved to compel

arbitration pursuant to the arbitration agreement bearing Mrs.

Bookman’s signature of Mr. Dew’s name. At the hearing on

Britthaven’s motion, plaintiff challenged the validity of the

arbitration agreement by arguing that neither Mrs. Bookman nor

Mr. Dew had actual authority to execute the arbitration

agreement on Mrs. Dew’s behalf. The trial court agreed,

entering an order denying Britthaven’s motion to compel

1

Britthaven is the only defendant that is a party to this

appeal.

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arbitration, but did not determine whether Mr. Dew or Mrs.

Bookman had apparent authority to sign the arbitration agreement

on Mrs. Dew’s behalf. That order was appealed to this Court,

where the case was remanded by unpublished opinion for findings

of fact and conclusions of law relating to the issue of apparent

authority. See Bookman v. Britthaven, Inc., No. COA12-663, 2013

WL 1314965 (N.C. Ct. App. April 2, 2013) (“Bookman I”).2

On remand, Britthaven’s request to present further evidence

on the issue of apparent authority went unanswered by

plaintiff’s counsel and the trial court. The trial court

entered a new order drafted by plaintiff’s counsel without

conducting an evidentiary hearing or considering any further

evidence. It concluded that neither Mr. Dew nor Mrs. Bookman

had “legal authority, expressed authority, actual authority,

2

Plaintiff contends that under the doctrine of the law of the

case, the Bookman I Court determined that “the [trial court’s]

additional findings fully support the conclusion of law that

neither Mr. Dew nor Mrs. Bookman had apparent authority to

execute the Arbitration Agreement on behalf of Mrs. Dew and that

Defendant-Britthaven’s Motion to Compel Arbitration must be

denied.” However, the Bookman I Court explicitly stated that

“[n]othing in this opinion is intended to express any view on

the merits of the apparent agency issue,” and “[w]e do not

address plaintiff’s arguments regarding the merits of the

apparent agency argument because that issue must be considered

in the first instance by the trial court.” Bookman I, at *1,

*4. Thus, plaintiff’s argument is overruled. See Goldston v.

State, 199 N.C. App. 618, 624, 683 S.E.2d 237, 242 (2009)

(“[T]he law of the case applies only to issues that were decided

in the former proceeding.”).

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implied authority, or apparent authority” to sign the

arbitration agreement on Mrs. Dew’s behalf, and thus it denied

Britthaven’s motion to compel arbitration. Britthaven filed

timely notice of appeal from the order.

Discussion

I. Apparent Authority

Britthaven’s sole argument on appeal is that the trial

court erred by denying its motion to compel arbitration because

Mr. Dew and Mrs. Bookman had apparent authority to sign the

arbitration agreement on Mrs. Dew’s behalf. After careful

review, we reverse and remand.

Britthaven’s appeal from the trial court’s order denying

its motion to compel arbitration is interlocutory. Appeals may

be taken from interlocutory orders in two circumstances:

First, the trial court may certify that

there is no just reason to delay the appeal

after it enters a final judgment as to fewer

than all of the claims or parties in an

action. N.C.G.S. § 1A–1, Rule 54(b) [2013].

Second, a party may appeal an interlocutory

order that “affects some substantial right

claimed by the appellant and will work an

injury to him if not corrected before an

appeal from the final judgment.”

Dep’t of Transp. v. Rowe, 351 N.C. 172, 174–75, 521 S.E.2d 707,

709 (1999) (citation omitted), cert. denied, 534 U.S. 1130, 151

L. E. 2d 972 (2002). This Court has previously held that “[t]he

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right to arbitrate a claim is a substantial right which may be

lost if review is delayed, and an order denying arbitration is

therefore immediately appealable.” U.S. Trust Co., N.A. v.

Stanford Grp. Co., 199 N.C. App. 287, 289-90, 681 S.E.2d 512,

514 (2009) (citation and quotation marks omitted). Thus, we

hold that Britthaven’s appeal is properly before us.

“When a party disputes the existence of a valid arbitration

agreement, the trial judge must determine whether an agreement

to arbitrate exists.” Sciolino v. TD Waterhouse Investor

Servs., Inc., 149 N.C. App. 642, 645, 562 S.E.2d 64, 66, disc.

review denied, 356 N.C. 167, 568 S.E.2d 611 (2002). “The trial

court’s findings regarding the existence of an arbitration

agreement are conclusive on appeal where supported by competent

evidence, even where the evidence might have supported findings

to the contrary.” Ellision v. Alexander, 207 N.C. App. 401,

404, 700 S.E.2d 102, 106 (2010). “Accordingly, upon appellate

review, we must determine whether there is evidence in the

record supporting the trial court’s findings of fact and if so,

whether these findings of fact in turn support the conclusion

that there was no agreement to arbitrate.” Sciolino, 149 N.C.

App. at 645, 562 S.E.2d at 66.

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“The law of contracts governs the issue of whether an

agreement to arbitrate exists.” Brown v. Centex Homes, 171 N.C.

App. 741, 744, 615 S.E.2d 86, 88 (2005). In order to hold an

alleged principal contractually liable to a third party for the

acts of his agent, the third party has the burden of proving

that

a particular person was at the time acting

as a servant or agent of the [principal]. An

agent’s authority to bind his principal

cannot be shown by the agent’s acts or

declarations. This can be shown only by

proof that the principal authorized the acts

to be done or that, after they were done, he

ratified them. One who seeks to enforce

against an alleged principal a contract made

by an alleged agent has the burden of

proving the existence of the agency and the

authority of the agent to bind the principal

by such contract.

Simmons v. Morton, 1 N.C. App. 308, 310, 161 S.E.2d 222, 223

(1968) (citations omitted).

Here, the trial court was to determine whether Mr. Dew or

Mrs. Bookman had apparent authority to bind Mrs. Dew as their

principal to the arbitration agreement.

Apparent authority is that authority which

the principal has held the agent out as

possessing or which he has permitted the

agent to represent that he possesses. Under

the doctrine of apparent authority, a

principal’s liability in any particular case

must be determined by what authority the

third person in the exercise of reasonable

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care was justified in believing that the

principal had, under the circumstances,

conferred upon his agent.

Munn v. Haymount Rehab. & Nursing Ctr., 208 N.C. App. 632, 639,

704 S.E.2d 290, 295 (2010) (citation and quotation marks

omitted). Furthermore, “the principal cannot restrict his

liability for acts of his agent within the scope of his apparent

authority by limitations thereon of which the person dealing

with the agent has not notice.” Morpul Research Corp. v.

Westover Hardware, Inc., 263 N.C. 718, 721, 140 S.E.2d 416, 419

(1965).

The law of apparent authority usually

depends upon the unique facts of each

case[.] . . . Thus, in a case where the

evidence is conflicting, or susceptible to

different reasonable inferences, the nature

and extent of an agent’s authority is a

question of fact to be determined by the

trier of fact. Where different reasonable

and logical inferences may not be drawn from

the evidence, the question is one of law for

the court.

Foote & Davies, Inc. v. Arnold Craven, Inc., 72 N.C. App. 591,

595, 324 S.E.2d 889, 893 (1985) (citations omitted).

On remand, the trial court found as fact that:

13. Neither Frederick Washington Dew nor

Terri Dew Bookman discussed with Carthina

Roberson Dew anything with regards to

consenting to any arbitration on her behalf

on August 24, 2010 or at anytime relevant

hereto.

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. . .

15. Carthina Roberson Dew did not delegate

to Terri Dew Bookman or Frederick Washington

Dew the right and/or authority to agree to

any arbitration agreement on her behalf on

August 24, 2010 or at anytime relevant

hereto.

. . .

18. Carthina Roberson Dew did not give the

authority either expressed or implied to

Terri Dew Bookman or Frederick Washington

Dew to execute the Resident and Facility

Arbitration Agreement.

19. Carthina Roberson Dew did not hold Terry

Dew Bookman nor Frederick Washington Dew out

to Britthaven, Inc., as having or possessing

the right and/or authority to execute or

agree to any arbitration agreement on her

behalf on August 24, 2010 or at anytime

relevant hereto, nor did she make or

indicate any manifestations of such

authority to Britthaven, Inc.

. . .

21. At no time during the admission

procedure on August 24, 2010 or at anytime

relevant hereto did Carthina Roberson Dew

hold Terry Dew Bookman or Frederick

Washington Dew out as possessing the right

to agree or enter into any arbitration

agreement on her behalf.

22. At no time during the admission

procedure on August 24, 2010 or at anytime

relevant hereto did Carthina Roberson Dew

permit Terry Dew Bookman or Frederick

Washington Dew to represent that they

possessed the right or authority to agree or

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enter into any arbitration agreement on her

behalf. (Emphasis added.)

Based on these findings of fact, the trial court concluded that

neither Mr. Dew nor Mrs. Bookman had apparent authority to sign

the arbitration agreement on Mrs. Dew’s behalf and that any

belief on Britthaven’s part of apparent authority was

unreasonable and unjustified under the circumstances. Even

assuming that the trial court’s findings of fact are supported

by competent evidence and are thus binding on appeal, Ellision,

207 N.C. App. at 404, 700 S.E.2d at 106, they are insufficient

to support the trial court’s conclusion that no apparent

authority existed to bind Mrs. Dew to the arbitration agreement.

Significantly, the trial court made no factual findings as

to whether Mrs. Dew conferred authority on Mrs. Bookman or Mr.

Dew to conduct the admission process in general on her behalf.

Thus, its analysis as to the arbitration agreement is

incomplete. Ms. Watson averred that both Mr. Dew and Mrs.

Bookman “presented themselves as having full authority to act on

behalf of Mrs. Dew, and to sign and execute any and all

necessary documents on her behalf.” Indeed, not only does

plaintiff not challenge the enforceability of any of the eleven

other contracts signed by Mrs. Bookman and Mr. Dew on Mrs. Dew’s

behalf, Mrs. Bookman averred that she signed documents in Mr.

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Dew’s name so that Mrs. Dew could be “admitted” into Britthaven.

The complaint itself states that Mrs. Dew was “admitted” into

Britthaven, and the trial court found as fact that “[Mrs. Dew]

was admitted as a resident” of Britthaven. Ms. Watson averred

that the paperwork signed by Mrs. Bookman and Mr. Dew is

“necessary” for a resident to be admitted into Britthaven.

Therefore, the trial court’s finding of fact that Mrs. Dew was

“admitted” and plaintiff’s own concession that Mrs. Dew was

“admitted” tends to show that at the very least, there may have

been actual or apparent authority conferred on Mr. Dew or Mrs.

Bookman to execute some or all of the contracts that were needed

in order to complete the admission process.

If such authority did exist, the issue regarding the

apparent authority to enter into the arbitration agreement would

become one of scope. The North Carolina Supreme Court has

established that “[t]he principal is liable upon a contract duly

made by his agent with a third person . . . when the agent acts

within the scope of his apparent authority, unless the third

person has notice that the agent is exceeding his actual

authority.” Morpul Research Corp., 263 N.C. at 721, 140 S.E.2d

at 418. Throughout the admission process, Mrs. Bookman and Mr.

Dew signed twelve contracts with Britthaven on Mrs. Dew’s

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behalf. Of those twelve contracts, they now challenge the

enforceability of only one – the arbitration agreement. Mrs.

Bookman signed Mr. Dew’s name on signatory lines reserved for

Mrs. Dew or her “Legal Representative,” “Responsible Party,” and

“Agent or Representative.” Ms. Watson averred that neither Mr.

Dew nor Mrs. Bookman “raised any objection to agreeing to or

signing any of the documents that I presented them” and that

“[a]t no time during the admission process, did Mr. Dew or his

daughter make any statement or take any action to suggest that

their authority to act on behalf of Mrs. Dew was limited in any

way or that either lacked the authority to sign any of the

paperwork on her behalf.” Given that Mrs. Bookman and Mr. Dew

may have had authority to conduct the admission process for Mrs.

Dew, and Ms. Watson averred that she was unaware of any

limitation on this authority if it existed, there remains

evidence which the trial court failed to address in its findings

of fact and conclusions of law “that would allow, but not

require, a finding of apparent authority” to enter into the

arbitration agreement. Bookman I, at *4.

Rather than allowing Britthaven, the party bearing the

burden of proof, to put on further evidence as to these matters

after remand from Bookman I, the trial court entered new

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findings of fact taken verbatim from plaintiff’s proposed order.

Such findings are only supported by affidavits from Mrs. Bookman

and Mr. Dew that were initially presented to the trial court in

support of plaintiff’s argument that there was no actual

authority to bind Mrs. Dew to the arbitration agreement.

Plaintiff presented no evidence for the purpose of resolving the

issue of apparent authority. Thus, because the trial court

denied Britthaven the opportunity to carry its burden of

establishing apparent authority and failed to address all issues

raised by the evidence it had before it, we conclude that it did

not fully comply with the Bookman I Court’s mandate to enter

“further findings of fact and conclusions of law regarding

whether either Mr. Dew or [Mrs.] Bookman had apparent authority

to enter into the arbitration agreement in this case.” Bookman

I, at *4; see Small v. Small, 107 N.C. App. 474, 477, 420 S.E.2d

678, 681 (1992) (“In a trial without a jury, it is the duty of

the trial judge to resolve all issues raised by the pleadings

and the evidence by making findings of fact and drawing

therefrom conclusions of law upon which to base a final order or

judgment.”).

Because the trial court failed to enter findings of fact or

conclusions of law resolving: (1) whether Mr. Dew or Mrs.

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Bookman had authority to bind Mrs. Dew to the other admission

contracts; (2) whether the arbitration agreement fit into the

scope of this potential authority; (3) whether there was any

limitation on this potential authority; and (4) whether

Britthaven was aware of any limitation on this authority if one

existed, we must reverse the trial court’s order and remand. We

further instruct the trial court to conduct an evidentiary

hearing as needed to resolve these outstanding issues.

Conclusion

For the reasons stated above, we reverse the trial court’s

order denying Britthaven’s motion to compel arbitration and

remand for further proceedings.

REVERSED AND REMANDED.

Judges MCGEE and ELMORE concur.