CourtListener 10609816

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Cite as 2021 Ark. App. 505
Elizabeth Perry
I attest to the accuracy and
ARKANSAS COURT OF APPEALS
integrity of this document DIVISION I
No. CV-20-718
2023.08.01 13:11:45 -05'00'
2023.003.20244
Opinion Delivered December 8, 2021
ASHLEY OPERATIONS, LLC, D/B/A
CROSSETT REHABILITATION AND
HEALTH CENTER; ROSS M. PONTHIE;
JOHN PONTHIE; JEJ INVESTMETNS,
LLC; MARYBRET, LLC; 1101
WATERWELL ROAD, LLC; SLC
OPERATIONS MASTER TENANT, LLC; APPEAL FROM THE ASHLEY
SOUTHERN ADMINISTRATIVE COUNTY CIRCUIT COURT
SERVICES, LLC; PROFESSIONAL [NO. 02CV-18-254]
NURSING SOLUTIONS, LLC;
CAREPLUS STAFFING SOLUTIONS,
LLC; DEBRA A. WATKINS-JONES, IN
HER CAPACITY AS ADMINISTRATOR
OF CROSSETT REHABILITATION AND
HEALTH CENTER; KIEDRA T. KIRK,
IN HER CAPACITY AS DIRECTOR OF
NURSING OF CROSSETT
REHABILITATION AND HEALTH
CENTER; AND JOHN DOES 1
THROUGH 5 HONORABLE ROBERT BYNUM
GIBSON, JR., JUDGE
APPELLANTS

DONNIE MORPHIS, AS SPECIAL
ADMINSTRATOR OF THE ESTATE OF
MILDRED MORPHIS, DECEASED, AND
ON BEHALF OF THE WRONGFUL
DEATH BENEFICIARIES OF MILDRED
MORPHIS, DECEASED
APPELLEE
AFFIRMED

WAYMOND M. BROWN, Judge
Ashley Operations, LLC, d/b/a Crossett Rehabilitation and Health Center, and

numerous other associated parties (Ashley Operations) bring this interlocutory appeal from

an order of the Ashley County Circuit Court denying their motion to compel arbitration

of a negligence complaint filed by appellee Donnie Morphis as special administrator of the

estate of Mildred Morphis. Appellants argue that the circuit court erred in refusing to

enforce a valid arbitration agreement. We find no error and affirm.

On April 6, 2017, Donnie assisted with Mildred’s admission to Crossett

Rehabilitation and Health Center (CRHC) in Crossett, Arkansas, for medical, nursing, and

personal care. The nursing-home facility required signatures on necessary admission

documents. Donnie signed the admission form for his mother. The admission agreement

recited the following:

The undersigned resident or resident’s representative (collectively, the
“Resident”) hereby request admission of /s/ Mildred Morphis (Name of Resident)
to Crossett Rehabilitation and Health Center (the “Nursing Facility” or
“Facility”) for medical, nursing, and personal care. The Nursing Facility and the
Resident agree to the following terms for the Resident’s care.

A “Resident Authorization” followed. It stated in pertinent part:

I, /s/ Mildred Morphis, (Name of Resident) do hereby state that I am of
sound mine and competent to execute this Resident Authorization and do so of my
own free will and accord. I hereby authorize /s/ Donnie Morphis to handle on my
behalf any and all matters associated with my admission as a resident to
_________________________ (Name of Facility). I further give the above-named
representative authority to execute on my behalf any and all proposed agreements
with the Facility. Specifically, the above-named representative has the authority to
accept the terms of and execute any proposed admission agreement and/or
arbitration agreement with the Facility.

However, instead of Mildred signing the authorization, Donnie signed it. The admission

form requested that Mildred appoint a family member to act as a “responsible party.” The

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admission form also asked two questions: “Do you have a power of attorney?” and “Do you

have a legal guardian?” Mildred answered no to both questions. The form then asked

Mildred to “[p]lease state the name of the responsible party and one alternate.” Donnie was

listed as the responsible party, and Brittany Young was listed as the alternate. Mildred did

not sign the admission agreement, but Donnie signed as the “Resident's Legal

Representative” and “Resident’s Representative.” Three boxes were listed under the

“Resident’s Representative” line: “Power of Attorney,” “Guardian,” and “Other

(Specify).” Donnie checked the “Other” box and indicated that he is Mildred’s son.

That same day, Donnie also signed an arbitration agreement that was incorporated

by the admission form. The form was required to be signed as a condition of Mildred’s

admission to the facility. 1 The arbitration agreement contained a box next to the signature

line asking for the identity of the signatory; the options on the list of signatories were

“Resident,” “Guardian,” “Power of Attorney,” “Spouse,” and “Adult Children.” Donnie

checked the box for “Adult Children.” A separate line below the signature block read as

follows: “________ (Check if applicable): A copy of my guardianship papers, durable

power of attorney[,] or other documentation, [sic] has been provided to the Facility and is

attached.” The blank was not checked. There was also a place for a witness signature if the

document was signed by a “Responsible Party.” Donnie signed the document as the

“Responsible Party,” but not witness signature was included.

1
The agreement contained a ten-day right of recission, which included language
stating that the resident would not be discharged from the facility if the resident exercised
his or her right to rescission.

3
Mildred was a resident at CRHC from April 6, 2017, until her death on October 16

at the age of ninety-five. Donnie was appointed special administrator of Mildred’s estate on

April 12, 2018. He filed the negligence complaint against Ashley Operations on October

26. He stated that as a result of Ashley Operation’s negligence, Mildred suffered numerous

physical and emotional injuries: multiple falls resulting in injuries, including a frontal

hematoma, right clavicle fracture, bruising, and a forehead knot and abrasion; a Stage III left

heel pressure ulcer; a Stage II coccyx pressure ulcer; an infected chest lesion; mouth lesions;

pneumonia; septic shock; dehydration; renal insufficiency; poor hygiene; unnecessary pain

and suffering; and death. Ashley Operations filed an answer on December 5 asserting the

existence of an arbitration agreement and denying the material allegations of Donnie’s

complaint.

Ashley Operations filed a motion to compel arbitration on June 16, 2020, contending

that the arbitration agreement encompassed Donnie’s claims against it. 2 It argued that

Mildred was a third-party beneficiary to the contract between it and Donnie. Ashley

Operations alleged that Donnie signed the agreements in his individual capacity, making a

valid contract to arbitrate between him and Ashley Operations. Donnie filed a response on

June 26, denying the validity and enforceability of the arbitration agreement and asking the

circuit court to reserve ruling on Ashley Operations’ motion until arbitration-related

discovery was complete. Donnie filed a supplemental response on July 14 arguing that he

lacked the power or authority to execute the arbitration agreement on Mildred’s behalf.

2
The arbitration agreement stated that “any claim, dispute or controversy (“claim”)
between the parties shall be resolved by final and binding arbitration.”

4
Therefore, he claimed that Mildred could not be a third-party beneficiary to the contract

because Donnie was not a party to the contract. He also alleged fraud in the inducement.

In sum, Donnie argued that there was never a valid agreement to arbitrate. He again asked

the circuit court to reserve its ruling on Ashley Operations’ motion until discovery had

concluded.

The circuit court held a hearing on Ashley Operations’ motion to compel on July

14. At the hearing, Ashley Operations contended that Donnie signed the agreement with

them for Mildred’s benefit, and as a result of that contract, Mildred resided at CRHC and

received medical, nursing, and personal care thus making her a third-party beneficiary. The

circuit court did not make an oral ruling but informed the parties that it would make a

decision in a couple of weeks. The circuit court filed an order on August 17, denying

Ashley Operations’ motion to compel. The order stated in pertinent part:

This Court has read the briefs and the admission and arbitration agreements.
Both agreements are attached to this Order for easy reference. The Court denies the
Defendants’ motion for self-evident reasons found on the first page of Mildred’s
admission agreement. Perplexingly, these reasons went unbriefed.

....

Had Mildred signed the authorization naming Donnie as her representative,
then arguably Donnie would have had the authority to sign the admissions agreement
as her representative. But Mildred did not sign the authorization. Instead, Donnie
signed as a grantor. Additionally, the name of the facility is left blank. The Court
finds that Mildred did not authorize Donnie to act as her representative when given
the opportunity to do so.

So, the admission agreement’s first sentence refers only to the “resident or
resident’s representative.” The admissions agreement contains no language
extending the authority to contract with the facility to anyone else other than the
resident or her representative. While the Resident Authorization is clearly intended
to operate as a power of attorney “lite”, it does not contain Mildred’s signature.
Because Defendants’ Motion to Compel Arbitration is wholly unsupported by the

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admission agreement’s contract term, Defendant’s position that Mildred’s estate is a
third party beneficiary to the admission agreement between Donnie, individually,
and the facility beggars belief.

While the arbitration agreement uses the term “responsible party”, Mildred’s
admission agreement does not. In any event, the record contains no proof that
Donnie had any authority to act on Mildred’s behalf. When the opportunity was
afforded Mildred to designate Donnie to act for her, she did not do so.

....

Motion to compel arbitration is denied.

Ashley Operations filed a timely notice of appeal on September 15.

An order denying a motion to compel arbitration is immediately appealable pursuant

to Arkansas Rule of Appellate Procedure–Civil 2(a)(12).3 We review a circuit court’s denial

of a motion to compel arbitration de novo on the record. 4 While we are not bound by the

circuit court’s decision, in the absence of a showing that the circuit court erred in its

interpretation of the law, we will accept its decision as correct on appeal. 5

The parties do not dispute that the Federal Arbitration Act (“FAA”) 6 governs the

agreements at issue. The FAA establishes a national policy favoring arbitration when the

parties contract for that mode of dispute resolution. 7 Likewise, in Arkansas, arbitration is

strongly favored as a matter of public policy and is looked upon with approval as a less

3
(2020).
4
Robinson Nursing & Rehab. Ctr., LLC v. Phillips, 2019 Ark. 305, 586 S.W.3d 624.
5
Progressive Eldercare Services-Morrilton, Inc. v. Taylor, 2021 Ark. App. 379.
6
9 U.S.C. §§ 1–16.
7
Reg’l Care of Jacksonville, LLC v. Henry, 2014 Ark. 361, 444 S.W.3d 356.

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expensive and more expeditious means of settling litigation and relieving docket

congestion. 8 Despite an arbitration provision being subject to the FAA, we look to state

contract law to decide whether the parties’ agreement to arbitrate is valid. 9 The same rules

of construction and interpretation apply to arbitration agreements as apply to agreements in

general. 10 In deciding whether to grant a motion to compel arbitration, two threshold

questions must be answered: (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? 11 In answering

these questions, doubts about arbitrability must be resolved in favor of arbitration. 12 We are

also guided by the legal principle that contractual agreements are construed against the

drafter. 13

We must first determine the threshold inquiry of whether a valid agreement to

arbitrate exists. 14 We have held that, as with other types of contracts, the essential elements

for an enforceable arbitration agreement are (1) competent parties, (2) subject matter, (3)

8
Id.
9
Phillips, supra.
10
Id.
11
Id.
12
Colonel Glenn Health and Rehab, LLC v. Aldrich, 2020 Ark. App. 222, 599 S.W.3d
344.
13
Id.
14
Phillips, supra.

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legal consideration, (4) mutual agreement, and (5) mutual obligations. 15 As the proponent

of the arbitration agreement, Ashley Operations has the burden of proving these essential

elements. 16

When a third party signs an arbitration agreement on behalf of another, we must

determine whether the third party was clothed with the authority to bind the other person

to arbitration. 17 The burden of proving an agency relationship lies with the party asserting

its existence. 18 Not only must the agent agree to act on the principal’s behalf and subject to

his control, but the principal must also indicate that the agent is to act for him. 19

Ashley Operations contend that Donnie signed the arbitration agreement in his

individual capacity, and as such, Mildred became a third-party beneficiary. Two elements

are necessary in order for the third-party-beneficiary doctrine to apply under Arkansas law:

(1) there must be an underlying valid agreement between two parties, and (2) there must be

evidence of a clear intention to benefit a third party. 20 Thus, the critical question is whether

Donnie signed the arbitration agreement while acting in his individual capacity such that it

created an enforceable contract between Donnie and Ashley Operations, with a clear

intention to benefit Mildred. Ashley Operations asserts that such is the case. However,

15
Id.
16
Id.
17
Id.
18
Id.
19
Id.
20
Id.

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Donnie argues that he signed the agreement only on behalf of, and as representative of,

Mildred. Ashley Operations has failed to demonstrate that Donnie signed the arbitration

agreement in his individual capacity rather than a representative capacity. The following

statement was located above the signature in the arbitration agreement: “If I am acting as

the Resident’s Responsible Party and am not the Resident’s Guardian or hold Power of

Attorney for the Resident, I affirm that I have been given the authority to enter into this

Arbitration Agreement by the Resident and to act on his/her behalf.” The language in the

arbitration agreement itself contemplated someone signing it with representative authority,

not in the person’s individual capacity. When the agreements were signed, Donnie lacked

any authority to act on Mildred’s behalf or to bind her. Because there was no valid

agreement between Ashley Operations and Donnie, the circuit court correctly denied

Ashley Operations’ motion to compel arbitration.

To the extent that Ashley Operations argues that the supreme court’s ruling in Jorja

Trading, Inc. v. Willis 21 somehow disposes of our need to resort to state law when

determining whether a party is bound by the third-party-beneficiary doctrine, that argument

is misplaced. Jorja did away with the court’s authority to invalidate a provision in an

arbitration agreement unless it would likewise invalidate it under Arkansas contract law in

general. Here, before a party can bind another as a third-party beneficiary in any contract,

he or she must be clothed with the authority to do so. Therefore, the circuit court’s ruling

in this case does not contradict the supreme court’s holding in Jorja.

Affirmed.

21
2020 Ark. 133, 598 S.W.3d 1.

9
HARRISON, C.J., and VAUGHT, J., agree.

Kutak Rock LLP, by: Samantha Blassingame and Alexis E. Stevens, for appellant.

Wilkes & Associates, PA., a/k/a Wilkes & McHugh, P.A., by: Robert E. Salyer, pro hac

vice, for appellee.

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