Media & Insights
December 30, 2020
Garcia v. KND Development 52, LLC (Dec. 15, 2020, B301929) __ Cal.App.5th __ [2020 WL 7351173]
Plaintiff’s husband died after being admitted to two different Kindred hospitals for treatment. Plaintiff sued the hospitals for negligence, elder abuse, and wrongful death. The hospitals moved to compel arbitration based on two agreements, one signed by plaintiff, another signed by plaintiff’s son. The hospitals argued that plaintiff and her son were the decedent’s ostensible agents with authority to execute the arbitration agreements. The hospitals’ motion was supported by declarations of hospital staff stating they inferred, based on custom and practice during the admission process, that the decedent had authorized his relatives to execute the arbitration agreements. However, no hospital declarant described the actual circumstances of decedent’s admissions, or stated they knew from personal observation that the decedent had authorized his relatives to execute an arbitration agreement on his behalf. The trial court denied the motion to compel arbitration, ruling that the hospitals failed to meet their burden of proving that the arbitration agreements were authorized. The hospitals appealed.
The Court of Appeal affirmed, explaining that the evidence of authorization consisted only of inferences drawn by the hospital declarants which the trial court was not compelled to accept and which were controverted by decedent’s wife and son.
The court also rejected the hospitals’ argument that the trial court was compelled to accept evidence upholding the arbitration agreements under Kinder Nursing Centers Ltd. Partnership v. Clark (2017) __ U.S. __ [137 S.Ct. 1421]. The Court of Appeal explained that Kinder construed the Federal Arbitration Act (FAA) as preempting state laws discriminating against arbitration agreements, but Kinder nonetheless allows courts to invalidate arbitration agreements based on generally applicable contract defenses that do not discriminate against arbitration. Because the defense based on an agent’s lack of authority to execute an agreement presents a contractual question that is neutral as to arbitration, the trial court’s ruling was consistent with the FAA.