Hickory Heights Health and Rehab, LLC; Central Arkansas Nursing Centers, Inc.; Nursing Consultants, Inc.; And Michael Morton v. Mary Hines, as Personal Representative of the Estate of Zelma Grissom and on the Behalf of the Wrongful Death Beneficiaries of Zelma Grissom

Cite as 2020 Ark. App. 55

Digitally signed by Elizabeth Perry
ARKANSAS COURT OF APPEALS
Date: 2022.08.10 13:16:17 -05'00' DIVISION II
Adobe Acrobat version: 2022.001.20169
No. CV-19-277

HICKORY HEIGHTS HEALTH AND Opinion Delivered: January 29, 2020
REHAB, LLC; CENTRAL ARKANSAS
NURSING CENTERS, INC.; APPEAL FROM THE PULASKI
NURSING CONSULTANTS, INC.; COUNTY CIRCUIT COURT,
AND MICHAEL MORTON TWELFTH DIVISION
[NO. 60CV-18-5346]
APPELLANTS
HONORABLE ALICE S. GRAY,
V. JUDGE

MARY HINES, AS PERSONAL
REPRESENTATIVE OF THE ESTATE
OF ZELMA GRISSOM AND ON THE
BEHALF OF THE WRONGFUL
DEATH BENEFICIARIES OF ZELMA
GRISSOM

APPELLEE AFFIRMED

MEREDITH B. SWITZER, Judge

This appeal arises from the denial of a motion to compel arbitration. Mary Hines’s

mother, Zelma Grissom, was a resident of Hickory Heights Health and Rehab, LLC. As

personal representative of her mother’s estate and on behalf of Zelma’s wrongful-death

beneficiaries, Mary filed a lawsuit against several entities, including Hickory Heights Health

and Rehab, LLC, Central Arkansas Nursing Centers, Inc., Nursing Consultants, Inc., and

Michael Morton (collectively “Hickory Heights”). 1 She asserted claims of negligence,

medical negligence, breach of the admission agreement, breach of the provider agreement,

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Other defendants were named in the lawsuit but are not parties to this appeal.
and deceptive trade practices. Hickory Heights answered the complaint, asserted the dispute

was governed by an arbitration agreement, and later filed a motion to compel arbitration of

all claims against it. Following a hearing, the circuit court entered its order denying the

motion to compel on October 30, 2018. The court found the arbitration agreement was

invalid and unenforceable. This appeal followed. Hickory Heights contends the circuit

court erred in finding there was no valid agreement between it and Mary. Our jurisdiction

is pursuant to Rule 2(a) of the Arkansas Rules of Appellate Procedure—Civil. We affirm.

The only facts pertinent to this appeal are those involving the admission and

arbitration agreements, which were executed when Mary’s mother began her residency at

Hickory Heights. Zelma Grissom, the actual resident, did not execute either agreement.

Instead, Mary signed the admission agreement on the line labeled “Resident’s Responsible

Party.” “Resident’s Responsible Party” is defined in the admission agreement as follows:

The Resident’s Responsible Party is the Resident’s legal guardian, if one has been
appointed, the Resident’s attorney-in-fact, if the Resident has executed a power of
attorney, or some other individual or family member who agrees to assist the Facility
in providing for the Resident’s health, care and maintenance. It includes a person
who manages, uses, controls, or otherwise has legal access to Resident’s income or
resources that legally may be used to pay Resident’s share of cost or other charges
not paid by the Arkansas Medicaid Program or any other source.

Mary also signed the arbitration agreement as the “Responsible Party” and wrote

“Daughter” on the line labeled “Responsible Party’s Relationship to Resident.” The

arbitration agreement defines “Responsible Party” accordingly:

Your Responsible Party is your legal guardian, if one has been appointed, your
attorney-in-fact, if you have executed a power of attorney, or some other individual
or family member who agrees to assist the Facility in providing for your health, care
and maintenance.

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Also in the arbitration agreement, the following sentence appears with no checkmark beside

it:

_________ (Check if applicable) A copy of my guardianship papers, durable power
of attorney or other documentation has been provided to the Facility and is attached.

The arbitration agreement states that it is “an addendum to and part of the admission

agreement” and “a condition of admission” that “governs the resolution of claims,” and

“any and all claims, disputes, and controversies . . . shall be resolved exclusively by binding

arbitration and not by a lawsuit or resort to court process.”

Hickory Heights moved to compel arbitration of the claims against it on the theory

that Mary signed the arbitration agreement in her individual capacity and that Zelma was

therefore bound to its terms as a third-party beneficiary. In support of its argument, Hickory

Heights admits that Zelma was not a named party to the agreements. Hickory Heights

notes that the only name written on the arbitration agreement is that of the responsible

party, Mary, and there was no indication Mary was attempting to act as a representative of

Zelma. Hickory Heights contends that by identifying herself as Zelma’s “daughter,” she

was merely indicating her relationship to the resident and not indicating she had authority

to bind Zelma. It also contends that Mary knew she did not have authority to act on her

mother’s behalf, and when she signed the agreements, valid contracts were formed having

the clear intent to provide care and treatment for Zelma. In other words, Zelma was the

intended third-party beneficiary of the agreements. Lastly, Hickory Heights contends that

because Mary attempts to sue for breach of the admission agreement, she must be bound by

the admission agreement’s terms, which includes the incorporated arbitration agreement.

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The circuit court rejected Hickory Heights’s position, finding that Mary’s signing

the arbitration agreement in her capacity as Zelma’s daughter does not support the inference

that Mary was signing the agreement in her individual capacity. Accordingly, the third-

party-beneficiary doctrine did not apply. The circuit court further found ambiguity

regarding the capacity in which Mary signed the arbitration agreement, and construing the

ambiguity against Hickory Heights, as the drafter, found the arbitration agreement

unenforceable.

We review a circuit court’s order denying a motion to compel arbitration de novo

on the record. Hickory Heights Health & Rehab, LLC v. Cook, 2018 Ark. App. 409, 557

S.W.3d 286. Arbitration is simply a matter of contract between parties. Id. Whether a

dispute should be submitted to arbitration is a matter of contract construction, and we look

to the language of the contract that contains the agreement to arbitrate and apply state-law

principles. Id. The same rules of construction and interpretation apply to arbitration

agreements as apply to agreements generally. Id. Therefore, we seek to give effect to the

parties’ intent as evidenced by the arbitration agreement itself. Id. The construction and

legal effect of an agreement to arbitrate are to be determined by this court as a matter of

law. Id.

Hickory Heights acknowledges that in the recent case of Cook, supra, our court held

that the third-party beneficiary doctrine did not apply with respect to a similar arbitration

agreement executed by a resident’s daughter as the “Responsible Party.” Our court

reasoned that there was an ambiguity regarding whether the responsible party was

attempting to sign in an individual or representative capacity, and our court construed that

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ambiguity against Hickory Heights as the drafter of the agreement. Hickory Heights

contends Cook should not be followed here because it was wrongly decided. Hickory

Heights argues that the Cook court erred in ignoring the principle that doubts about

arbitrability must be resolved in favor of arbitration and that Cook is preempted by the

Federal Arbitration Act. We disagree.

The pertinent language of the arbitration and admission agreements in the instant

case is identical to that in Cook. As explained in Cook, two threshold questions must be

answered in deciding whether to grant a motion to compel arbitration: (1) is there a valid

agreement to arbitrate between the parties, and (2) if such an agreement exists, does the

dispute fall within its scope? In answering these questions, doubts about arbitrability must

be resolved in favor of arbitration. Id. Our court is also guided by the legal principle that

contractual agreements are construed against the drafter. Id. The Cook opinion stated that

the lawsuit undoubtedly fell within the scope of the arbitration agreement but concluded

that the question presented by the appeal was whether Mabel, the mother/resident, was

bound by the arbitration agreement signed by her daughter, Ethel. Mabel alleged that Ethel

signed solely in a representative capacity for Mabel but lacked any authority to do so;

therefore, Mabel was not bound by the arbitration agreement. Hickory Heights alleged that

Ethel signed the arbitration agreement in her individual, not representative, capacity; Mabel

was clearly the intended beneficiary of those contracts; and as a third-party beneficiary of

the contracts, she was bound by their terms requiring arbitration. Id.

As explained in Cook, the terms of an arbitration agreement generally do not apply

to those who are not parties to the contract. In Arkansas, the presumption is that parties

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contract only for themselves. Id. A contract will not be construed as having been made for

the benefit of a third party unless it clearly appears that such was the parties’ intention. Id.

In order to apply the third-party-beneficiary doctrine under Arkansas law, there must be an

underlying valid agreement between two parties, and there must be evidence of a clear

intention to benefit a third party. Id.

The instant case is nearly identical to the facts and issues presented in Cook. In Cook,

our court reasoned:

Although these documents recite that Ethel signed as “Responsible Party” and
not as the resident’s “Representative,” the definition of “Responsible Party” in these
documents can reasonably be construed to indicate that such authority is being
asserted:

Your Responsible Party is your legal guardian, if one has been appointed,
your attorney-in-fact, if you have executed a power of attorney, or some
other individual or family member who agrees to assist the Facility in
providing for your health, care and maintenance.

The Arbitration Agreement requests documentation to support the asserted
authority on which the person claims to be the “Responsible Party.” Mabel did not
have a legal guardian, but she did have a durable power of attorney vested in Charles
A. Cook. Mr. Cook was the person who possessed legal authority and who was
available to be the “Responsible Party.” Ethel did not possess legal authority to bind
her mother in a representative capacity, which is an undisputed fact.

Other cases on this topic reflect a consistent line of reasoning that family members
do not possess the authority to bind the resident when that person attempts to act in
a representative capacity.

2018 Ark. App. 409, at 7–8, 557 S.W.3d at 290–91. The Cook opinion then listed and

discussed several cases and concluded that

[i]n the present appeal, the parties to the arbitration agreement are recited to
be the facility, and “The Resident and/or Responsible Party.” Because there is no
clear indication anywhere in this agreement to demonstrate whether Ethel was
signing in an individual capacity or in a representative capacity, we hold that there is

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ambiguity in the agreement that must be construed against the drafter of the
agreement.

“[O]ur laws require that if uncertainty or ambiguity exists within the terms of
a contract, or if it is susceptible to more than one reasonable construction, then the
courts must construe the contract most strongly against the party who drafted it.”
Therefore, we construe this contract most strongly against Hickory Heights and
affirm the trial court’s refusal to compel arbitration.

2018 Ark. App. 409, at 10–11, 557 S.W.3d at 292 (citations omitted). We are not persuaded

that Cook was wrongly decided or that it does not control the outcome here. As explained

in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), arbitration agreements must be

placed on an equal footing with other contracts and enforced according to their terms, but

arbitration agreements may still be invalidated by generally applicable contract defenses. The

same ambiguity that existed in Cook exists here because there is no clear indication anywhere

in this agreement to demonstrate whether Mary was signing in an individual capacity or in

a representative capacity. Therefore, the agreement here must also be construed against

Hickory Heights as its drafter.

In addition to arguing that Cook was wrongly decided, Hickory Heights attempts to

distinguish Cook from the instant case in light of what it alleges is a “crucial difference”—

the plaintiff in Cook did not assert a claim for breach of the admission agreement as the

plaintiff did in this case. Relying upon American Insurance Co. v. Cazort, 316 Ark. 314, 871

S.W.2d 575 (1994), Hickory Heights argues that Mary “cannot have it both ways” here

because by suing for breach of the admission agreement, Mary has conceded its validity and

should not be permitted to avoid enforcement of the arbitration agreement, which was an

addendum to and incorporated into the admission agreement. We disagree.

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Zelma did not agree to arbitrate, and her daughter, Mary, had no authority to make

such an agreement on her behalf. The language incorporating the arbitration agreement

into the admission agreement is therefore of no consequence. We hold that the circuit

court did not err in determining that Hickory Heights cannot compel arbitration pursuant

to an agreement that was never validly formed.

Affirmed.

VIRDEN and BROWN, JJ., agree.

Hardin, Jesson & Terry, PLC, by: Jeffrey W. Hatfield, Kynda Almefty, Carol Ricketts, and

Kirkman T. Dougherty, for appellants.

Reddick Moss, PLLC, by: Matthew D. Swindle and Robert W. Francis, for appellee.

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